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ECONOMIC   STUDIES 


OF 


THE    UNIVERSITY   OF    CHICAGO 


NUMBER    IV. 


NOW  READY 

No.  I. 

THE    SCIENCE    OF    FINANCE 

By  GusTAV  CoHN.     Translated  from  the  German  by  Dr.  T 
B.  Veblen.     8vo.  pp.  12  + 800;  price  ^3.50 


No.  II. 

HISTORY  OF  THE   UNION   PACIFIC  RAILWAY 
By  Henry  Kirke  White 


No.  III. 
THE    INDIAN    SILVER    CURRENCY 

By  Karl  Ellstaetter.     Translated  from  the  German   by 
Professor  J.  Laurence  Laughlin. 


IN  PREPARATION 

No.  V. 

HISTORY    OF    THE    LATIN    UNION 
By  Henry  Parker  Willis 


STATE  AID 


TO 


RAILWAYS   IN    MISSOURI 


BY 

JOHN    W.    MILLION,    A.M., 

SOMETIME    FELLOW  IN    POLITICAL    ECONOMY    IN    THE    UNIVERSITY  OF 

CHICAGO  ;    PROFESSOR    OF    HISTORY    AND    POLITICAL    ECONOMY 

IN    HARDIN    LADIES'    COLLEGE,    MEXICO,    MISSOURI 


OF  THE 

UNIVERSlTi 

or 


CHICAGO 

^fit  ^anibetgitg   of   (Etiraflo   ^tess 

1896 


■■^^^^X:^^' 


Copyrighted  by 

THE    UNIVERSITY   OF   CHICAGO 

1896 


THE   UNIVERSI-n-   OF  CHICAGO   PRESS 


TO 
A   TRIBUTE    OF   FRIENDSHIP 


184405 


PREFACE. 

The  question  of  nationalizing  the  agencies  of  production, 
especially  those  which  partake  more  or  less  of  the  nature  of 
natural  monopolies,  is  receiving  and  doubtless  will  continue  to 
receive  from  legislators  and  students  of  Political  Economy  no 
little  attention.  In  view  of  this  fact  increasing  interest  should 
be  found  in  the  investigation  of  past  experiments  in  state 
activity  in  industrial  matters  ;  for  the  results  of  such  experiments 
can  hardly  fail  of  being  helpful  in  the  discussion  of  present 
problems. 

The  study  here  presented  is  offered  as  a  bit  of  information 
regarding  the  question  of  state  activity  in  connection  with  rail- 
ways. The  particular  question  on  which  it  possibly  presents 
some  information  is  that  of  state  aid  and  not  of  state  control. 
The  two  questions  are,  however,  closely  related.  By  virtue  of 
the  fact  that  a  state  aids  railways  the  possibility  arises  that  it 
may  some  day  control  and  operate  them.  This  is  true  for  the 
reason  that  in  aiding  railways  the  state  must  maintain  certain 
checks  on  the  aided  companies  ;  and  these  checks,  in  the  form 
of  mortgages  and  the  like,  are  likely  sooner  or  later  to  make  it 
necessary  for  the  state  to  assume  active  control.  In  Missouri 
this  possibility  became  virtually  a  reality  in  the  case  of  all  the 
roads  aided  but  one  (the  Hannibal  and  St,  Joseph);  although  the 
state  did  not  choose  to  exercise  its  right  of  control  for  any 
considerable  period  except  in  the  case  of  one  road  (the  South 
West  Branch) .  The  aim  of  the  study  is  not,  however,  to  discuss 
the  question  of  the  advisability  of  state  aid  or  state  control ;  it 
is  merely  to  present  some  information  on  state  aid  to  railways 
that  may  be  of  value  in  the  present  discussion  of  somewhat 
similar  questions. 

It  is  perhaps  needless  to   call    the  attention  of  the  reader  to 

vii 


VIM  PREFACE 

the  fact  that  a  large   part  of   Chapter   I.  and   all   of  Chapter  VI. 
arc  the  results  of  mere  compilation. 

The  writer  is  indebted  to  Mr.  Albert  O.  Allen,  chief  clerk  in 
the  office  of  the  State  Auditor  at  Jefferson  City,  Missouri,  for 
valuable  assistance  in  rendering  state  documents  accessible,  to 
other  state  officers  for  the  use  of  libraries,  rooms,  and  the  like, 
and  especially  to  Hon.  F.  A.  Sampson  of  Sedalia,  Missouri,  for 
the  loan  of  special  reports,  copies  of  minutes  of  proceedings  of 
conventions,  and  other  valuable  material  otherwise  inaccessible, 
and  for  a  careful  reading  of  the  manuscript.  The  writer  would 
also  acknowledge  his  indebtedness  to  Mr.  R.  W.  Herrick, 
Instructor  in  Rhetoric  in  The  University  of  Chicago  for  a  careful 
reading  of  the  manuscript  and  for  many  valuable  criticisms. 

John  W.  Million. 

Hardin  Ladies'  College, 
Mkxico,  Mo.,  March  1896. 


CONTENTS. 


Chapter  I.     Early  Period  (1806-1S50). 

§    I.     External  and  internal  commercial  situation  of  Missouri           -          -  i 

§    2.     Agitation  for  railways  : 

(a)  Convention  in  St.  Louis  in  1836  ------  3 

(d)  Recommendation  by  the  governor  in  1836        -         -         .         -  6 

(c)  Great  activity  in  1837 -  7 

§    3.     Experiments  of  other  states ;  general  view              -         -                   -  7 
(i)  Eastern  states  : 

(a)  New  York     ---------  8 

(d)  Pennsylvania    ---------  II 

(c)  Maryland       --------  14 

(2)  Western  states ;    common  causes  for   unsystematic  and    rash 

schemes            ..-.-----  16 

(fl)  Ohio     ----------  17 

{d)  Illinois      ----------  20 

(c)  Indiana          _-,---■--  23 

[d)  Michigan           ---------  25 

(<?)  Other  states            ..----•-  26 

§    4.     Final  analysis  of  the  state  debts  in  184 1          -          -          -          -          -  28 

§    5.     The  attitude  of  the  states  in  debt       ------  28 

§    6.     Possible  significance  of  the  disastrous  conclusion  of  this  period  of 

state  activity    -          -          ------                    -  29 

§    7.     The  banking  experiment  of  Missouri          .         .         -          -         -  30 

§    8.     The  warehouse  enterprise  of  Missouri  -----         -  33 

§    9.     Further  preliminary  attempts  at  securing  internal  improvements  in 
Missouri  between  1839  and   1850  —  Board  of  internal  improve- 
ments established ;  its  work           ------  34 

§  10.     Causes  for  general  reluctance  concerning  internal  improvements  in 

the  early  forties         --------  37 

§11.     Great  decline  of   interest    in    internal    improvements    in   Missouri 

(1844-1847)         ---------  37 

§12.     Revival  of  this  interest  in  Missouri  in  1848  and  1849     -         -         -  39 
(a)  Incorporation  of  the  Hannibal    and    St.   Joseph    and    Pacific 

railroads         ----------  40 

(d)  State  still  conservative          -------  42 

§13.     The  policy  of  aiding  railways   in  Missouri  a  part   of  a  general 

movement        ----------  42 

§14.     The  uniqueness  of  the  experiment  in  Missouri    -         -         -         -  43 

ix 


X  CONTENTS 

PAGK 

Chapter  II.     The  Initiation  of  the  Policy  of  Aiding  Railway  Construction 
(1851). 
§  I.  Ceneral  view  .......--  44 

§  2.  Reasons  for  granting  aid  : 

(i)  To  develop  the  territory  of  the  state  and   the  metropolis  of  St. 

Louis      ----------  48 

(2)  To  attract  the  transcontinental  trafitic  of  the  fulure  through  the 

state: 
(a)  Influence  of  railway  construction  in  the  East     -  -  -  54 

(d)  Influence  of  possible  western   lines.     Mr.   Whitney's   pro- 
posed route ;  a  "more  southern  route."  .         -         -  56 

(3)  Insufficiency  of  Missouri  capital  and  lack  of  private  enterprise 

in  railways        ---------  62 

§  3.  Manner  of  aiding      ---------  64 

§  4.  The  first  aiding  act,  February  22,  185 1  .         .         .         _         .  65 


Chapter  III.     The  Execution  of  the  Policy  of  State  Aid  (1851-1860). 

§  I.  More  applicants  for  state  aid            .-.----  67 

§  2.  Charters  of  the  companies  aided  and  to  be  aided        .         -         -  68 

(1)  Question  of  publicity  of  accounts       ------  69 

(2)  The  railway  —  a  quasi-public  institution         -         .          -          -  70 

(3)  Banking  privileges  denied  to  the  companies      -         -         -         -  71 

(4)  Time  allowed  the  companies    for  the  construction    of  the  rail- 

ways        ----------  y  I 

(5)  Exemption  from  taxation  till  the  payment  of  a  dividend     -          -  72 
§  3-  Relation  of  the  system  as  outlined  to  the   future    railway  develop- 
ment of  the  Mississippi  valley           ------  72 

§4.   Progress  of  the  companies  to  the  close  of   1855         .          ,          -          -  73 

(i)  Work  of  construction  begun          ------  73 

(2)  Congressional  land  grants          -------  74 

(3)  Grants  of  land   transferred  to  the  Hannibal  and  St.  Joseph  and 

Pacific  railways          --------  75 

(4)  Genesis  of  the  South  West  Branch    ------  76 

(5)  Estimates  on  the  cost  of  the  Pacific  and  the  South  West  Branch  77 

(6)  The  Iron  Mountain  Branch  of  the  Pacific     -          -          -          -  78 

(7)  Request  of  the  North  Missouri  Railway  Company  for  aid           -  78 

(8)  Law   concerning    the    liability    of    stockholders   too   rigid    for 

investors  ----------  79 

(9)  Progress  of  construction  on  the   Pacific     -----  80 

(10)  Second  general  grant  of  aid  (December  1852)     -          -          -  80 

(11)  Conditional  settlement  of  the  route    of  the  Pacific  and  exten- 

sion beyond  the  borders  of  Missouri       -----  81 

(12)  Public  opinion  favorable  to  state  aid    -----  82 

(13)  First  division  of  the  Pacific  completed       -----  83 

(14)  Route  of  the  South  West  Branch ;  its  finances       -         -         -  85 


CONTENTS  XI 

TAG  K 

(15)  Route  of  the  North  Missouri  -          - 86 

(16)  First  division  of  the  North  Missouri  completed;  its  cost       -  86 

(17)  Progress  on  the    Hannibal    and  St.  Joseph ;  its  finances  and 

land  grant      ----------  S7 

(18)  Route  of  the  St.  Louis  and  Iron  Mountain;  its  finances  -  88 
§  5.  Railwa}-  development,  an  impetus  to  the  iron  industry  of  the  state  -  90 
§    6.  Significance  of  the   greatly   increased  cost  of   the   railways   so    far 

as  constructed   ---------  Qi 

(i)  The  Pacific 92 

(2)  The  North  Missouri 94 

(3)  General  causes  of  the  increased   cost            .         .         .         .  94 

(4)  Need  of  a  general  Board  of  Public  Works       -                   -         -  9^ 
§    7.  Bad  financiering          ---------  97 

§    8.  Grant  of  December  10,  1855            ---.---  99 

.    (i)   Reasons  for  the  grant            -------  99 

(2)  The  state  incautious           .-------  loo 

(3)  The  act  of  December  10  analyzed            -----  100 

§    9.  Progress  and  condition  of  the  railways    -          •          -                    -          -  102 

§  10.  Grant  of  March  3,  1857      -------  105 

§  II.  Progress  of  construction  in  1857  ;  depressed  condition  of  the  money 

market        ---------  ^°7 

%  12.  Act  of  November  17,  1857         -------  108 

(i)  Issues  of  bonds  suspended        ------- 

(2)  Powders  of  the  Board  of  Public  Works   extended 

(3)  State  interest  fund  to  be  augmented  by  a  special   tax  and  by 

other  means  --------- 

§13.  Rapid  progress  of  the  companies  in  1858-9         -         -         -         -  i^o 

§  14.  Suspended  issues  of  bonds  fall  due         -         -         -         -         -         -  n,'? 

§  15.  Conclusion  of  the  period  —  retrospect  and  prospect              -         -  113 


Chapter  IV.     Progress  and  Drift  of  the  aided  Railway  Enterprises  during  the  War 
(1860-1866). 
§    I.   Defaulting   railway  companies  unable  to  get  further  aid  from   the 

state  -  -  -  -  -  -  -  -  115 

§    2.  Disturbed  condition    of  the   country  commercially    and  politically 

unfavorable  to  railways  -  -  -  -  -  ^ '  5 

§    3.  Causes  for  the  default  of  the  companies  : 

(1)  Lack  of  traffic  -  -  -  -  -  -  116 

(2)  Unproductivity  of  land  grants  -  -  -  -  i'^ 

(3)  Proportion  of  private  funds  expended  to  state  aid  granted  too 

small  -  -  -  -  -  -  -  119 

§    4.  Causes  of  the  great  cost  of  railways  in  Missouri : 

(i)  Inexperience  in  railway  construction  -  -  -  120 

(2)   Extravagance;  or  fraudulent  use  of  funds  -  -  -  1 21 

§    5.  A  bankrupt  state   treasury  -  -  -  -  -  124 


xii  CONTENTS 


t^    b.   Progress  in  construction  to  the  close  of  the  war; 

(1)  Obstacles  to   progress;   (<?)  depredations  by  Confederates,  (/;) 

lack  of  funds  -  -  -  -  126 

(2)  Sources  of  needed  funds      -----  127 

(3)  Pacific  Railway  completed  -  ij.? 

(4)  Further  aid  asked  by  the  North  Missouri,  an  unequal  competitor 

with  the  Hannibal  and  St.  Joseph  133 

(5)  Miles  of  railway  completed  at  the  close  of  the  war       -  139 
i;    7.  State  debt  incurred  for  railways               ...              -  139 


Chapter  V.     The  Conclusion  of  the  Experiment  of  State  Aid  (1866-1S6S). 

t^    I.   Railway  companies  continue  in  default        _  -  -  -  140 

§    2.    Preliminary  attempts  to  dispose  of  the  railways  -  -  141 

(i)   Purchase  of  the  Platte  Country  Railroad  by  the  state   -  -  14 1 

(2)  Disagreement  between  the  state  authorities  and  the  companies 

formerly  owning  the  road  -  -  -  -  142 

(3)  Sale  under  the  compromise  act  of  P"ebruary  18,  1865    -  -  143 

(4)  Default  of  the  purchasers  a  second  time       -  -  143 
§    3.  Comprehensive  act  of  February  ig,  1866,  disposing  of  {a)  the  Platte 

Country,  (i))  the  South  West  Branch,  (r)  the  St.  Louis  and  Iron 

Mountain,  and  (</)  the  Cairo  and  P'ulton  railways  -  -  143 

^    4.  Sale  of  the  Platte  Country  Railway  postponed  -  -  144 

§    5.  Sale  of  the  St.  Louis  and  Iron  Mountain  and  Cairo  and  P\dton  rail- 
ways : 

(1)  The  railways  bought  in  by  the  state  -  -  -  145 

(2)  Second  attempt  at  disposal  —  bids  of  November  8,  1866  -  146 

(3)  Award  of  the  commissioners  _  .  .  -  146 

(4)  Investigation  demanded  _  .  .  -  -  146 

(5)  Report  of  the  investigating  committee         -  -  -  147 

(6)  Question  of  higher  bids  -  -  -  -  -  148 

(7)  Suit   against  the   purchaser  of  the    railways    by  the  Attorney- 

General  of  the  state  .  .  _  .  -  150 

(8)  Petition  of  Mr.  Allen  for  withdrawal  of  the  suit  -  -  151 

(9)  Report  of  the  committees  appointed  to  investigate  Mr.  Allen's 

case  --..-..  152 

(10)  Value  and  condition  of  the  railways 

{a)  Testimony  of  Mr.  Allen       -              -              -              -              -  153 

(d)  Further  facts  concerning  the  value  of  the  railways       -  154 

(11)  Confirmation  of  Mr.  Allen's  title,  by  act  of  March  17,  1868         -  155 
§  6.  Condition  of  the  public  morality  of  the  state  reflected   in  the  dis- 
posal of  the  St.  Louis  and  Iron  Mountain  and   Cairo   and   Fulton 
railways                                  -              -              -              -              -              -  156 

§  7.   Disposal  of  the  Missouri  Valley  Railway: 

(1)  A  liberal  policy  towards  the  railways  now  initiated  157 

(2)  Capacity  of  the  former  purchasers  to  pay  for  the  railway  -  158 


CONTENTS  XI 11 


(3)  Reasons  for  a  liberal  policy  toward  this  road  -  -  157 

(4)  Lien  released  and  company  aided  by  act  of  March  17,  1868      -  159 
§  8.  Sale  of  the  North  Missouri : 

(1)  A  second  lien  ......  160 

(2)  Value  of  the  railway       -  -  -  -  .  .  i6q 

(3)  The  case  summed  up  -  -  -  -  -  166 

(4)  Railway  sold  by  act  of  March  17,  1868  -  -  -  167 
§  9.  Sale  of  the  South  West  Branch  : 

(i)   Default  of  the  purchaser,  Gen.  John  C.  Fremont        -  -  169 

(2)  Sale  of  the  railway  by  him  to  a  new  company  -  -  169 

(3)  Seizure  of  the  railway  by  the  state    -  -  -  -  170 

(4)  Operated  by  the  state     -  -  -  -  -  -  170 

(5)  Schemes  and  bids  for  getting  control  of  the  railway 

(6)  Gift  of  the  railway  and  lands  in  fee  simple  by  the  state  to  a  pri- 

vate company    -  -  -  -  -  -  -  171 

§10.  Sale  of  the  Pacific  Railway  : 

(i)   Preliminary  attempts  .  .  .  _  .  17^ 

(2)  Value  of  the  railway: 

{a)   Investigation  by  a  committee  appointed  by  the  state  -  175 

{b)  The   business   of   the   railway:    (a)  from   the   books  of    the 
company  and  {b)  from  the  report  of   a  special  committee 

to  the  stockholders  -  -  -  -  -  176 

[c)  Statements    of    President    Taylor    of    the     company     and 

others  -  -  -  -  •  -  I79 

(3)  Sale  of  the  railway  a  foregone  conclusion  -  -  -  180 

(4)  Legislature  under  the  influence  of  King  Boodle        -  -  184 

(5)  Star  chamber  report   of  the  committee   that   bought   the   legis- 

lature -  -  -  -  -  -  -  185 

(6)  Significance  of  the  low  stage  of  public  morality        -  -  187 
§11.  Receipts  from  the  sale  of  the  railways  and  net  railway  debt  incurred 

to  assist  in  building  1 540  miles  of  railway     -  -  -  187 

§12.  Investigation  of  rumors  of  fraud  and  corruption       -  -  -  190 

§13.  Financial  condition  of  the  state  : 

(i)   Attempts  at  funding  ....  -  194 

(2)  Reduction  of  the  debt  between  1865-1869  -  -  -  194 

(3)  Reduction  of  taxes     ------  195 

(4)  Gradual  improvement  of  the  state's  finances       -  .  -  195 


Chapter  VI.     Internal-Improvement  Experiment  in  Southern  States. 

§    I.  General  statement  -  -  -  -  -  -  196 

§    2.  Georgia  ---.---  I97 

§    3.  Tennessee  -------  203 

§    4.  Virginia  -------  206 

§    5.  South  Carolina  -------  208 


XIV  CONTENTS 

PACK 

§    6.  North  Carolina                  ......  210 

§    7.   Louisiana      -                            -                                          ...              .  212 

t^    8.  Kentucky                          •                           -             -             -             -  214 

tj    9.  Alabama       -              -              -                                          -              -              -  215 

§  10.  Arkansas              -                            -                            ...  217 

§  II.  Texas             ........  219 

§  12.  Florida                 .......  220 


Chapter  VII.      Summary  and  Conclusion 

§  I.  Causes  of  failure  in  internal-improvement  enterprises  -  -  222 

§2.   Probability  of  the  completion   of  the  unfinished  roads  in  Missouri 

without  the  release  of  the  state's  liens    -  -  -  .  225 

§  3.  Redeeming  features  in  the  history  of  internal-improvement  experi- 
ments     ...--.--  228 

§  4.  State  activity  versus  private  enterprise  in  railway  matters  -  229 


Appendix     I.     Tables  Relating  to  Railroads  in  Missouri       -  -  -  231 

Appendix  II.     Bill  of  Complaint  and  Decree  against  the  Committee  of  the 

Board  of  Directors  of  the  Pacific  Railroad  Company      -  244 


STATE   AID  TO   RAILWAYS   IN   MISSOURI 


CHAPTER  I. 

EARLY   PERIOD.     1806-1850. 

§  I.  That  one  or  more  of  the  highways  of  commerce 
between  the  eastern  and  western  portions  of  the  North  Ameri- 
can continent  should  pass  through  the  territory  now  known  as 
the  state  of  Missouri  was  clearly  seen  by  the  early  settlers  of 
this  territory,  and  was  also  very  early  recognized  by  the  general 
government.  Between  1806  and  1840  commercial  adventurers 
from  Missouri,  and  especially  from  St.  Louis,  established  a  con- 
siderable trade  by  means  of  pack  mules  and  wagons  between 
Missouri  and  Mexico.  But  as  the  carrying  on  of  this  trade  was 
fraught  with  many  dangers,'  both  on  account  of  Indians  and 
Mexicans,  and  on  account  of  many  natural  disadvantages,  it 
developed  but  slowly  for  several  years.  By  1824,  however,  the 
trade  "amounted  to  $190,000  in  gold  and  silver  bullion  and 
coin  and  precious  furs,"^  a  business  too  great  to  be  carried  on  by 
pack  mules  ;  wagons  were  therefore  employed,  and  the  trade 
was  moreover  extended  from  Santa  Fe  to  Chihuahua  and  Sonora. 
Traffic  now  rapidly  increased,  and  in  1828  "two  hundred  wagons 
loaded  with  goods  of  a  value  of  half  a  million  dollars  at  Mis- 
souri cost  arrived  at  Santa  Fe."  In  answer  to  one  of  the  early 
memorials  to  Congress,^  from  the  inhabitants  of  the  territory  of 
Missouri,  asking  the  protection  and  assistance  of  the  general 
government  for  the  Santa  Fe  trade,  Congress  had  passed  a  law 
in  1825  authorizing  the  President  of  the  United  States  to  cause 

'In  1806  a  party  of  commercial  adventurers  from  St.  Louis  were  thrown  into 
prison  at  Santa  Fe,  but  were  liberated  the  next  year.  In  1812  and  18 18  other  parties 
met  with  similar  experiences.  Many  fatal  conflicts  with  the  Indians  are  also  reported. 
See  "A  Memorial  to  Congress,"  Laws  of  Missouri,  1S3S,  p.  328,  and  Register  oj 
Debates  in  Congress,  1824-3,  vol.  i.  pp.  344-345- 

^  Register  of  Debates  in  Congress,  1824-3,  vol.  i.  p.  no. 

^Register  of  Debates  in  Congress,  1824-3,  vol.  i.  p.  6. 


2  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

a  road  to  be  "  marked  out  from  the  western  frontier  of  Missouri 
to  the  confines  of  Mexico."'  The  reasons,  as  given  by  Senator 
Benton,  which  secured  the  })assage  of  this  bill,  were  that  the 
trade  was  large  enough  to  demand  protection,  that  it  would  be  a 
permanent  trade,  that  there  were  no  other  sufficient  means  of 
transportation,  and  that  there  were  precedents  for  government 
action  in  such  a  case.^ 

The  government,  however,  did  nothing  towards  carrying  out 
the  construction  of  this  road.  The  slow  progress  which  it  was 
making  on  the  Cumberland  and  other  roads  possibly  afforded  a 
reason  for  not  prosecuting  new  enterprises  with  vigor.  More- 
over, the  incentive  to  action  in  this  particular  case  was  not  so 
great  after  1830  as  before.  Merchants  from  St.  Louis,  not  being 
allowed  the  drawbacks  given  to  merchants  from  other  cities  on 
goods  exported  in  the  original  package,  were  unable  to  compete 
with  traders  from  New  Orleans,  Philadelphia  and  New  York, 
who,  by  this  time,  had  found  their  way  to  Mexico  via  the  Gulf. 
Largely  on  this  account,  therefore,  but  mainly  on  account  of  a 
lack  of  better  means  of  transportation,  the  western  trade  of 
Missouri  in  1838  amounted  practically  to  nothing.^  At  this 
time  no  considerable  trade  overland  east  from  St.  Louis  existed  ; 
although  the  outlets  from  the  city  in  other  directions  by  means 
of  the  Mississippi  and  Missouri  rivers  were  almost  all  that  could 
be  desired. 

The  internal  trade  of  the  state  was  suffering  more  or  less 
from  the  lack  of  eflficient  transportation.  Although  the  state 
possesses  an  unusually  great  number  of  large  and  small  streams 
they  are  very  unreliable  for  transportation  purposes,  because  of 

'  United  States  Statutes  at  Large,  4,  p.  100. 

^The  particular  need  of  a  precedent  in  this  case  lay  in  the  fact  that  the  second  sec- 
tion of  the  bill  necessitated  the  construction  of  a  part  of  the  road  upon  foreign  (Mexi- 
can) territory.  The  particular  precedent  given  was  found  in  the  Acts  of  1806-7  ('^'  '^• 
Statutes  at  Large,  2,  pp.  397  and  444),  authorizing  the  construction  of  a  road  from 
Athens,  Georgia,  to  New  Orleans,  "  two  hundred  miles  of  which  .... 
[extended]  through  the  Dominions  of  the  King  of  Spain."  Register  of  Debates  in 
Congress,  1824-3,  vol.  i.  p.  348. 

"^Memorial  to  Congress  on  the  Santa  Fi  Trade  {1838) — Laws  of  Missouri,  1838-q, 
p.  328. 


EARLY    PERIOD  3 

the  sandy  nature  of  the  soil  which  forms  the  river  beds.  As 
early  as  1838  the  state  began  sending  memorials  to  Congress, 
asking  for  aid  in  rendering  her  rivers  navigable.' 

§  2.  To  a  people  confronted  with  such  difficulties  nothing 
could  have  proved  more  acceptable  than  the  railway,  the  com- 
mercial importance  of  which  had  but  recently  been  successfully 
demonstrated  to  the  world.  And  it  should  be  noted  in  passing 
that  the  main  cause  for  the  decline  of  interest  in  such  national 
enterprises  as  the  Cumberland  and  Santa  Fe  roads  was  the  pos- 
sibilities of  the  new  means  of  communication,  which  was  now 
beginning  to  attract  universal  attention. 

The  fact  that  the  railway  was  transplanting  the  common 
highway  greatly  intensified  the  desire  in  Missouri  for  commercial 
connection  with  the  great  west  ;  and  although  the  people  of  the 
state  had  to  wait  many  years  for  the  coveted  means  of  transpor- 
tation, they  began  at  once  a  systematic  agitation  of  the  question. 
The  first  step  was  taken  in  1836.  On  April  30th  of  that  year  a 
convention  assembled  in  St.  Louis.^  The  attendance  at  this  con- 
vention showed  that  even  at  this  early  period  there  was  con- 
siderable interest  in  securing  better  means  of  transportation 
— fifty-nine  delegates  assembling  from  eleven  counties.3  This 
convention  could,  however,  do  nothing  more  than  recommend 
lines  of  road  and  suggest  ways  and  means  for  securing  them. 

'  Memorial  to  Congress  on  the  Santa  Fe  Trade  (1838) — Laws  of  Missouri,  1838-g, 

P  331- 

'  See  a  Pamphlet  entitled  Proceedings  of  a  Convention  of  Delegates  for  the  Promo- 
tion of  Internal  Improvements  within  the  State  of  Missouri  (St.  Louis,  1836). 

3  Delegates  from  the  County  of  St.  Louis         -         -         -         -         -  14 

"             "                 "               Lincoln                .         .         .         .  5 

"                 "               Washington              .         -         .         .  7 

Cooper ,-----  3 

"                Warren             -----  3 

St.  Charles           -         .         -         -  4 

Calloway         -----  3 

"             "                 "               Montgomery        _         .         -    «     -  3 

"                 "               Boone               .         _         -         _         -  8 

"                 '•               Howard      -----  6 

Jefferson         -----  3 


4  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

Two  lines  were  recommended,  one  extending  from  St.  Louis  to 
Fayette,  in  Howard  county,  to  develop  an  agricultural  section  of 
the  state,  and  one  extending  from  St.  Louis  to  Washington 
county,  to  develop  a  mineral  section  of  the  state.  The  first 
would  leave  St.  Louis  in  a  northwesterly  direction,  the  second  in 
a  southwesterly  direction,  and  both  were  to  be  extended  as  trade 
demanded. 

For  ways  and  means  the  convention  had  no  valuable  prece- 
dents. The  success  of  the  Erie  Canal,  however,  had  resulted  in 
giving  a  great  impetus  to  the  internal-improvement  idea  in  many 
of  the  states  ;  and  the  ways  and  means  adopted  by  the  state  of 
New  York  in  this  enterprise  served  in  a  greater  or  less  degree  as 
precedents  for  other  states  in  like  matters.  The  internal 
improvements  of  the  province  and  later  of  the  state  of  Penn- 
sylvania had  been  all  but  abandoned  until  the  state  was  stimula- 
ted to  renewed  efforts  by  the  success  of  the  Erie  Canal.  Then 
at  a  very  early  date,  in  order  to  keep  pace  with  the  rival  state, 
Pennsylvania  had  organized  and  started  anew  her  system  of 
internal  improvements  on  a  grand  scale.  Although  the  ways 
and  means  recommended  by  the  St.  Louis  convention  for  Mis- 
souri were  not  in  all  respects  similar  to  those  adopted  in 
the  older  states  they  were  in  many.  The  convention  expressed 
the  desire  that  Congress  would  grant  the  state  half  a  million 
acres  of  land  to  be  used  in  making  internal  improvements.  It 
was  also  thought  that  the  state  could  safely  borrow  the  money 
needed  for  this  enterprise,  because  when  the  lines  were  once  put 
into  successful  operation  it  was  believed  that  they  would  pay  for 
themselves  without  burdening  the  state  with  taxes. 

The  prospects  of  the  road  entering  the  iron  region  of  the 
state  were  rendered  more  than  ordinarily  good  for  a  new  road 
by  the  demand  for  the  products  of  the  iron  industry  in  the  city 
of  St.  Louis  as  a  growing  metropolis  in  itself,  and  as  a  distribu- 
ting center.  The  annual  demands  for  the  products  of  iron  in  this 
city  were  placed  by  a  committee  of  the  convention  at  two  mil- 
lion dollars.'     It  was  also  stated  that  "  Blooms  are  now  trans- 

•  Value  of  cast  iron  per  annum    ------         $250,000 


EARLY    PERIOD  5 

ported  by  land  from  the  county  of  Washington  to  the  Mississippi, 
a  distance  of  fifty  miles,  and  from  the  county  of  Crawford  to 
the  Mississippi,  a  distance  of  between  two  and  three  hundred 
miles,  by  land  and  water.  From  the  Mississippi,  the  blooms  are 
transported  by  steamboats  to  Cincinnati  and  Pittsburg,  there 
manufactured  into  iron,  and  manufactures  of  iron  generally,  and 
reshipped  to  this  state,  and  sold  to  our  citizens,  thus  adding  to 
the  cost  of  the  articles  at  least  33^  per  cent.,  which  would  be 
saved  by  the  erection  of  the  contemplated  railroad  to  the  west 
and  southwest,  and  the  consequent  establishment  of  the  neces- 
sary manufactures  amongst  ourselves."  ^ 

The  amount  which  the  community  would  pay  in  transporta- 
tion charges,  annually,  upon  the  opening  of  this  road,  was 
estimated  by  a  committee  to  be  about  ;S420,ooo.^  For  this 
transportation  it  was  stated  that  the  community  was  now  paying 
$905,000  annually.  The  statement  of  the  committee  that  the 
$420,000  would  pay  5  per  cent,  on  8.4  million  dollars,  or  twice  as 
much  as  was  necessary  to  construct  the  road,  is  simply  an  instance 
of  the  loose  calculation  of  the  times.  Money  could  not  be  had 
in  those  days  in  Missouri  for  5  per  cent.      Furthermore,  the  cal- 

Brought  forward,  J!25o,ooo 

Value  of  bar  iron  per  annum           -          -          -          -          -  750,000 

Value  of  steel  per  annum           ------  20,000 

Value  of  steam  engines  for  mills  and  distilleries     -          -  150,000 

Value  of  nails  ---------  375,000 

Value  of  axes        --------  200,000 

Value  of  steamboat  engines       --.._-  280,000 

Value  of  chains,  shovels,  wire  and  the  like     -         -         -  50,000 


^2,075,000 


'^  Proceedings  of  Convention  of  Delegates,  &tc.,  pp.  13-20. 

^  These  amounts  were  made  up  as  follows  : 

25,000  tons  of  iron  at  ^3  per  ton     -         -     $  75,000  cost  now  $375,000 

5,000  tons  of  lead  at  $3  per  ton  -  15,000  cost  now      30,000 

62,000  tons  of  lumber     -  -  -  -       250,000  cost  now    375,000 

50,000  tons  of  coal  -  -  -  30,000  cost  now     125,000 


$370,000  $905,000 

Traffic  to  intermediate  points  -         -         50,000 


$420,000 


6  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

culation  leaves  wholly  out  of  account  transportation  expenses 
which  usually  consume  from  50  to  75  per  cent,  of  the  gross  earn- 
ings of  a  road. 

Although  nothing  recommended  by  this  convention  was  ever 
carried  out,  its  importance  lies  in  the  fact  that  it  gave  new  life 
to  the  desire  for  better  transportation. 

In  the  fall  of  the  same  year  in  which  the  convention  met  in 
St.  Louis,  Governor  Boggs  in  his  message  to  the  general  assem- 
bly, favored  a  general  system  of  railroad  construction.'  In  his 
recommendation  that  the  general  assembly  should  memorialize 
Congress  for  alternate  sections  of  land  along  these  routes  to  be 
used  in  aiding  the  construction  of  the  roads,  he  was  influenced 
simply  by  the  precedent  already  established  by  the  general  gov- 
ernment with  reference  to  other  states.  At  this  time  lands  had 
already  been  granted  to  Indiana,  Illinois,  and  Ohio  for  internal- 
improvement  purposes. ""  However,  important  grants  of  land  for 
railroad  purposes  can  hardly  be  said  to  have  been  made  prior  to 
1850.3  In  the  recommendation  of  the  governor,  as  a  further 
means  of  assistance,  that  Congress  be  asked  to  remit  the  duty 
on  all  iron  rails  and  machinery  imported  for  the  construction  of 
railroads,  the  governor  overlooked  the  fact  that  there  was  at  this 
time  no  duty  on  iron  rails  imported  to  be  used  on  railways,  if  so 
used  within  three  years  from  the  date  of  importation.''  As  a 
still  further  means  for  securing  funds,  the  governor  recommended 
the  establishment  of  a  bank  with  as  large  a  capital  as  was  allowed 
by  the  constitution.  '  The  bank  was  established  very  shortly  ; 
and  a  brief  account  of  it  will  be  given  later. ^ 

In  1837  internal   improvements   in   Missouri  received  a  great 

^  Senate  Journal,  1836-7,  p.  23. 

^ Laws  of  the  United  States  relating  to  the  Public  Domain,  House  Ex.  Doc,  XLVI. 
Congress,  3d  session,  vol.  xxv.  p.  258. 

^Ibid.,  p.  261. 

"The  law  remitting  the  duty  for  this  purpose  was  passed  July  14,  1832,  and 
remained  in  force  till  September  i,  1842  —  Congressional  Debates,  •vo\.  viii.  part  3, 
Appendix,  p.  48  ;  also  Taussig,  Tariff  History  of  the  United  States,  ^^.  S^,  125  and 
126. 

s  See  below,  p.  31  et  seq. 


EARLY    PERIOD  7 

impetus,  but  it  was  wholly  of  a  speculative  character.  The 
general  land,  canal,  and  railroad  speculation,  built  up  during  the 
prosperous  times  of  the  early  thirties,  and  greatly  increased  as 
it  was  by  President  Jackson's  arbitrary  financial  policy,  showed 
itself  in  Missouri  in  its  most  violent  aspect  during  the  first  two 
months  of  1837  in  the  particular  form  of  chartering  railroad 
companies.  From  January  23  to  February  6,  no  less  than  sev- 
enteen roads  were  incorporated  with  an  aggregate  capital  stock 
of  57,875,000.'  As  there  is  no  evidence  that  work  of  any  extent 
was  ever  begun  upon  these  roads,  and  as  there  was  a  great 
decline  in  the  number  of  roads  incorporated  during  the  years 
immediately  following,  the  incorporation  of  these  companies  can 
be  regarded  only  as  a  phenomenon  of  the  speculative  intoxica- 
tion of  the  times. 

^  3.  The  agitation  for  internal  improvements  m  Missouri, 
compared  with  the  activity  in  other  states  at  this  time,  however, 
was  really  insignificant.  A  cursory  review  of  the  experiments  in 
other  states  during  this  period  will  demonstrate  the  wisdom  of 
inaction  in  Missouri  and  enable  us  to  understand  why  the  state, 
when  beginning  her  railroad  enterprises  in  185  i,  refused  to  adopt 
literally  the  ways  and  means  tried  by  other  states  in  1836-7. 

It  is  a  fact  well  known  to  all  who  are  acquainted  with  the 
general  economical  development  of  the  United  States,  that  from 
the  time  of  the  acquisition  of  the  Northwest  territory,  and 
especially  from  the  time  of  the  purchase  of  Louisiana  plans  were 
suggested  both  by  private  parties  and  public  ofificials  for  giving 
this  great  territory  commercial  connection  with  the  Atlantic  sea- 
board. The  first  significant  attempt  for  the  accomplishment  of 
this  purpose  was  the  projection  of  the  Cumberland  road  in  1806 
by  the  general  government.  But,  aside  from  minor  attempts, 
the  first  significant  and  successful  undertaking  was  the  construc- 
tion of  the  Erie  Canal  under  the  auspices  and  at  the  cost  of  the 
state  of  New  York.  This  enterprise,  completed  in  1825,  resulted 
at  once  in  giving  an  impulse  to  other  states  and  was  a  source  of 
inspiration  for  several  years.     The  development  of  the  resources 

'^  Laws  of  Missouri,  iSj6-j  ;  for   projected  roads  see  map  below,  p.  55- 


8  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

of  the  several  states,  accordingly,  now  became  the  controlling 
desire  of  each.  The  plan  decided  upon  was  not  a  borrowed  one, 
but  grew  out  of  the  situation.  Canals  and  highways  had  of 
course  often  been  built  b}^  states  as  such  in  both  ancient  and 
modern  times  ;  indeed,  our  states  might  have  appealed  to  such 
facts  for  precedents,  if  it  had  been  thought  necessary.  But  they 
had  their  own  peculiar  situation.  They  were  without  capital ; 
and  the  people,  recognizing  that  their  ability  to  construct  lines 
of  transportation  was  limited  on  that  account,  very  properly 
decided  to  import  capital  into  the  state.  But  capital  could  be 
imported  only  b}^  the  use  of  the  credit  of  the  state ;  and  the 
state  was  the  only  power,  corporate  or  otherwise,  that  could 
issue  bonds  of  a  denomination  large  enough  to  secure  the  required 
capital.  Along  with  this  appeal  to  the  corporate  power  of  the 
state  to  import  capital,  there  appeared  in  many  states  a  sincere 
belief  in  the  efficiency  of  banking  institutions  to  create  capital. 
If  the  banks  could  have  accomplished  this,  they  would  indeed 
have  assisted  in  the  general  development  of  the  resources  of  the 
state.  This  belief,  indeed,  led  to  the  establishment  of  many 
banking  institutions  upon  unsound  principles.  However,  the 
main  element  in  the  bad  financiering  of  the  times,  which  led 
finally  to  the  failure  of  most  of  the  experiments,  was  the  nega- 
tive one  of  not  preparing  at  the  time  the  debt  was  contracted 
the  sure  means  for  its  ultimate  cancellation. 

The  experiences  of  the  older  states  of  New  York,  Pennsyl- 
vania, and  Maryland  will  first  engage  our  attention.  The  experi- 
ment of  New  York,  studied  from  the  standpoint  of  finance,  is 
easily  divided  into  two  periods:  (i)  That  of  sound  and  (2) 
that  of  unsound  financiering.  "In  181 7,  on  entering  upon  the 
construction  of  the  Erie  and  Champlain  canals,  a  sound  policy  of 
finance  was  devised.  It  was  determined  to  place  no  reliance 
whatever  on  the  contingent  revenues  of  the  proposed  work,  but 
to  constitute  a  fund  which  should,  without  possibility  of  failure, 
meet  the  interest  on  the  loans  requisite  for  the  construction  of 
the  canals."  A  fund  was  constituted  out  of  existing  "taxes  on 
steamboats,  on  salt,  on  goods  sold  at  auction,  and  on  some  other 


EARLY    PERIOD  9 

property."  Such  was  the  able  management  of  this  fund  that  "at 
the  close  of  1826,  when  the  canals  were  completed,  the  debt 
was  only  $7,72>7^77'^^  while  the  amount  of  money  that  had  been 
actually  expended  was  58,401,394.""  And  the  management  was 
such  for  the  next  ten  years  that  in  1836  the  whole  of  that  part 
of  the  debt  falling  due  in  that  year  was  paid  off  and  a  fund  was 
being  accumulated  for  meeting  the  remainder  when  it  should  fall 
due.  And  such  was  the  credit  of  the  state  that  when  the  state 
offered  a  large  premium  for  the  bonds  having  a  long  time  to 
run  the  offer  was  not  accepted.^ 

However,  a  less  pleasing  chapter  is  to  be  written  for  New 
York  after  1836.  The  success  of  this  first  experiment  of  course 
naturally  led  to  others,  but  in  these  later  undertakings  the  former 
sound  financial  policy  of  the  state  was  abandoned.  Between 
April  1825,  and  May  1836,  eight  new  canals  collateral  to  the 
Erie,  with  a  combined  length  of  360  miles,  costing  a  total  of 
1^9,377,760,  were  constructed,  and  "proved  expensive  failures." 
The  expense  of  keeping  these  canals  in  repair  during  this  time 
exceeded  the  revenue  derived  from  them  by  ^402, 908. 

As  these  canals  greatly  increased  the  business  upon  the  Erie 
Canal  plans  for  its  enlargement  were  projected  in  the  year  1834. 
These  plans  were  followed  by  others  of  still  greater  magnitude. 
The  canal  commissioners  advised  that  the  limitations  of  the 
amount  of  loans  for  state  enterprises  direct  and  for  the  aiding  of 
private  corporations  should  be  governed  only  "by  a  regard  to 
the  amount  of  state  stock  which  would  be  sent  into  the  market 
during  any  year."' 

Such  a  policy,  we  are  rightly  told,  "was  a  total  reversal  of 
that  on  which  the  Erie  Canal  had  been  constructed  ;  namely,  that 
of  setting  aside  specific  sums  derived  from  taxation  for  the  pur- 
pose of  meeting  the  principal  and  interest  on  loans,  and  confin- 
ing those  loans  to  necessary  works."  Furthermore,  an  enormous 
expenditure  on  the  enlargement  of  the  Erie  Canal  was  projected, 
based  on  prospective  revenues  to  be  derived   from   it.      Further 

'  Hunt's  Merchants^  Magazine,  xviii.  p.  245. 

'Ibid.,  p.  246.  'i Ibid.,  p.  247. 


10  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

large  additional  loans  were  proposed,  for  which  the  state  was  to 
be  responsible.  It  was  provided  in  each  case  that  the  state 
should  be  reimbursed  from  the  profits  of  the  enterprise,  any 
direct  taxation  being  thus  avoided.  How  unsound  these  propo- 
sals were  subsequent  history  showed. 

This  policy  prevailed  until  1841,  when  the  total  actual  debt 
of  the  state  was  $17,309,000,  with  works  under  construction 
which  would  require  S24, 590,000  for  their  completion,  making  a 
total  actual  and  prospective  debt  of  $68,5  5  7,000.  Even  the  policy 
of  allowing  only  a  reasonable  amount  of  stocks  to  be  thrown  on 
the  market  in  any  year  in  order  to  limit  the  expenditures  of  the 
state  was  disregarded.  Between  January  1839  and  March 
1 84 1,  the  bonds  issued  to  the  Erie  Railroad  were  sold  regardless 
of  law  and  of  price.' 

But  the  state  was  unable  to  go  to  the  full  extent  of  this 
"wild-cat"  policy.  In  1841  many  of  the  safety-fund  banks 
failed  and  the  state  had  to  issue  ;g348,i07  of  5  per  cent,  stock  to 
restore  to  the  "general  fund  "  the  amount  that  had  been  borrowed 
from  it  for  the  benefit  of  the  banks.  To  save  the  honor  of  the 
state  a  law  was  passed  in  1842  levying  a  tax  of  i  mill  on  the 
Si 00  valuation  of  property  and  establishing  a  sinking  fund  for 
the  extinguishment  of  the  debt  in  twenty-two  and  a  half  years.'' 
In  1848  the  outstanding  debt  of  the  state  was  $22,137,066,  of 
which  21  million  dollars  were  chargeable  to  internal-improve- 
ment ventures. 3 

What  makes  the  experience  of  New  York  in  internal  improve- 

'  Hunt's  Merchants'  Magazine,  xviii.  p.  248. 
^ Ibid.,  p.  250. 

3  Erie  and  Champlain  canals 
Profitless  works 
Preserving  credit  of  the  state 
General  fund    -  -  - 

Bankrupt  companies 
Solvent  companies    - 

Totals 
See  Hunt's  Merchants'  Magazine,  xviii.  p.  251. 


Issued 

%   7.739,771 
14,472,257 

5,422,136 

909,500 

3,665,700 

1,563,000 

% 

Redeemed 

7.739.771 

2,949,531 

346,006 

Outstanding 

9 

11,522,726 

5,076,130 

909,500 

3,665,700 

1,063,000 

$1 

500,000 

■533,772,364 

[1,189,302 

$22,137,066 

EARLY    PERIOD  I  I 

ments  after  1836  so  deprecable  is  the  fact  that  at  the  time  the 
state  possessed  one  great  canal  which  was  rapidly  paying  for 
itself.  Between  1838  and  1848,  although  the  earnings  of  the 
Erie  Canal  were  increased  more  or  less  by  the  help  of  the  collat- 
eral canals,  the  earnings  of  the  main  canal  represented  almost 
the  whole  of  the  canal  earnings  of  the  state.  The  earnings  of 
the  Erie  Canal  in  the  year  1847  were  S3, 360, 272  and  the  earn- 
ings of  all  the  canals  in  the  state  were  only  S3, 531, 771.  These 
figures  are  fairly  representative  of  the  whole   preceding  decade.' 

In  the  list  of  state  attempts  to  secure  internal  improvements, 
the  experiment  of  Pennsylvania,  if  not  first  in  order  in  point  of 
success,  certainly  comes  first  in  order  in  point  of  magnitude  and 
of  the  exhibition  of  weakness  on  the  part  of  the  state  adminis- 
tration at  almost  every  turn.  Pennsylvania  had  early  seen  the 
importance  of  connecting  the  Great  Lakes  and  the  interior  in 
general  with  the  Atlantic  seaboard.  She  had  accordingly,  in 
1789,  commenced  "a  series  of  improvements  of  various  descrip- 
tion—  which  encountered  various  difficulties  and  embarrass- 
ments." On  this  account  the  construction  of  some  was  carried 
on  very  slowly,  while  that  of  others  was  abandoned  altogether. 
However,  immediately  after  the  completion  of  the  Erie  Canal, 
the  spirit  of  rivalry  caused  the  state  of  Pennsylvania  to  begin 
(July  4,  1836)  what  was  described  by  a  writer  in  1840  as  "that 
great  system  of  internal  improvements  which  for  extent,  magni- 
tude, and  utility  stands  unrivaled  in  modern  times." ^  The  main 
object  to  be  accomplished  by  Pennsylvania  was  the  connection 
of  Pittsburg  with  Philadelphia  by  means  of  a  composite  line  of 
canal  and  railway.  This  work  was  finally  completed  in  1834  at 
a  cost  of  ^14,583,816.  Meantime  six  collateral  canals,  with  a 
total  mileage  of  314  miles,  had  also  been  constructed  at  a  cost 
of  S6, 471,994.3 

During  this  time,  however,  the  state  had  not  maintained  a 
judicious  system  of  taxation.     The  tax  laws  then  (1834)  in  exist- 

'  Hunt's  Merchants'  Magazine,  xviii.  p.  253. 

'^'Y2iQX\ex,  Desc7-iption  of  the  Canals  and  Railroads  of  the  O'nited  States  {lii,o),Y).gt, 

3  Hunt's  Merchants''  Magazine,  xx.  pp.  257-8. 


12  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

ence,  had  been  placed  on  the  statute  books  as  late  as  1831,  and 
"were  only  temporary  measures;  they  were  intended  to  sup- 
ply an  interest  fund  until  the  revenue  from  the  public  works  was 
sufficient  for  this  purpose,  and  they  would  have  expired  bv  limi- 
tation in  five  years,  if  they  had  not  been  repealed."'  But 
it  was  estimated  at  this  time  that  with  the  resources  then 
arising  from  "a  tax  of  2j4  per  cent,  on  collateral  inheritances,  a 
tax  on  personal  property,  auction  dues,  county  rates  and  levies, 
escheats  from  dividends  on  turnpike,  bridge  and  navigation  stock," 
and  from  the  net  income  of  the  canal,  which  was  $252,735  the 
first  year  (1835)  after  its  completion,  the  state  "would  soon 
have  defrayed  its  interest,  and  permitted  a  relaxation  of  taxes," 
had  it  discontinued  its  policy  of  aiding  internal-improvement 
enterprises.^ 

There  was  in  fact,  a  relaxation  of  taxes,  but  not  through  a 
discontinuation  of  the  aiding  policy.  It  is  in  this  connection 
that  the  bank  feature  enters  into  the  Pennsylvania  experiment, 
and  enters  in  a  way  at  once  different  from  and  more  significant 
than  that  of  any  other  state.  Upon  the  expiration  of  the  charter 
of  the  second  bank  of  the  United  States,  this  corporation  turned 
to  the  state  of  Pennsylvania  to  secure  a  new  charter.  The  charter 
was  granted  upon  the  conditions  that  the  bank  would  agree  "to 
pay  as  a  bonus  for  its  charter  4.5  million  dollars  to  purchase  Penn- 
sylvania stocks  at  a  high  rate  to  the  amount  of  6  million  dollars, 
to  loan  to  the  state  at  4  per  cent,  interest,  for  a  period  not 
exceeding  one  year  one  million  dollars  and  to  subscribe  to  railroad 
and  turnpike  stocks,  $675,000,"  making  a  total  of  $12,175,000. 
Moreover,  in  the  act  chartering  the  "United  States  Bank,"  sev- 
eral forms  of  taxation,  which  had  formerly  been  a  source  of  con- 
siderable financial  strength,  were  discontinued.  The  title  of  the 
act  was  "an  act  to  repeal  the  state  tax  on  real  and  personal 
property,  and  to  continue  and  extend  the  improvements  of  the 
state  by  railroads  and  canals,  and  to  charter  a  state  bank  to  be 
called  the  United  States   Bank. "3     This  first  great  misstep  even- 

'  Worthington,  Historical  Sketch  of  the  Finances  of  Pennsylvatiia,  p.  38. 
-  Hunt's  Merchants'  Magazine,  xx.  p.  259.  '^ Ibid.,  p.  259. 


EARLY    PERIOD  I  3 

tually  hurled  the  state  of  Pennsyh^ania  over  the  precipice  of 
insolvency.  Under  the  impulse  of  the  act  chartering  the  bank 
and  "of  the  influence  which  effected  its  passage,"  new  improve- 
ments were  begun  on  a  large  scale,  causing  the  expenditure  of 
many  millions.  Many  of  these  enterprises  were  finally  aban- 
doned by  the  state,  and  some  passed  into  the  hands  of  companies 
which  "paid  no  consideration  for  them."' 

It  is  a  short  story  to  trace  the  downward  course  of  Pennsyl- 
vania after  1836.  The  stringency  felt  everywhere  throughout 
the  country  in  1837,  did  not  reach  its  worst  in  Pennsylvania 
until  October  1839,  when  the  "United  States  Bank"  failed  the 
second  time.  "The  5  per  cent,  stock  of  the  state  which  had 
sold  for  115  in  1833,  would  not  sell  at  all  in  1839."-  The  state 
now  being  driven  to  take  refuge  in  taxation,  a  revenue  law  was 
passed  in  1840  which  was  intended  to  be  a  vigorous  measure. 
It  yielded  in  1841,  however,  only  $33,000,  whereas  it  was 
expected  to  yield  in  that  year  $600,000.  The  state  then,  as  if 
the  past  two  years  had  taught  no  lessons  in  banking,  granted 
the  right  to  certain  banks  to  subscribe  to  a  loan  for  the  com- 
monwealth, in  notes  of  one,  two  and  five  dollars  denomina- 
tions, issued  by  themselves  up  to  a  fixed  percentage  of  their 
respective  capitals.  These  "relief  notes"  were  issued  to  the 
extent  of  $2,220,265.  As  they  speedily  depreciated,  they  became 
"the  only  medium  in  which  the  state  received  revenues. "^  This 
step  completed  the  embarrassments  of  the  state.  She,  therefore, 
set  about  taking"  vigorous  measures  to  restore  her  credit. 

From  carefully  collected  data,  the  estimate  is  made  that  from 
the  beginning  of  internal  improvements  in  Pennsylvania,  "in 
1826  to  the  regeneration  of  public  credit  in  1844,  the  state  raised 
58.6  per  cent,  of  its  revenues  by  loans,  and  only  11.4  per  cent, 
by  taxation;"  and  of  the  vast  expenditure  ($74,216,694)  of  this 
period,  "76.8  per  cent,  was  employed  in  constructing  the  public 
works  and  in  paying  interest  on  the  loans  contracted  therefor. "•♦ 

In  1845,  after  the  state  had  become  able  to  resume  the  pay- 

'  Hunt's  Aferc/ianls'  Alagazine,  xx.  p.  260.  ''Ibid.  ^ Ibid.,  p.  261. 

••  Worthington,  Historical  Sketch  of  the  Finances  of  Penitsylvania,  p.  63. 


14  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

mcnt  of  interest,  the  debt  of  the  state  was  $40,703,866,^  almost 
every  dollar  of  which  was  incurred  on  account  of  public  works. 
In  1853  a  special  committee  estimated  that  the  total  cost  of  the 
public  works  up  to  that  time  had  been  589,747,768.^  As  the 
railroad  and  canal  tolls  had  amounted  to  1^25,342,020,  the  net 
cost  would  be  $64, 405, 748. 

It  is  possible  that,  after  many  years  of  costly  experimenting, 
the  system  of  public  works  in  Pennsylvania  seemed  to  bean  utter 
failure,  and  that  generally,  observers  saw  less  value  in  the  public 
works  of  the  state  than  they  really  possessed.  At  any  rate,  it 
was  stated  in  1849  that  "the  immense  loans  and  expenditures  of 
the  state  of  Pennsylvania  to  develop  her  resources  had  been  of 
very  little  avail."  As  the  coal  industry  has  always  been  one  of 
the  greatest  of  the  state,  the  fact  that  in  1849,  of  the  three  mil- 
lion tons  received  in  Philadelphia,  only  192,5 1 1  were  shipped  over 
the  state  works,^  indicates  that  these  works  were  not  well  con- 
ceived, at  least  regarding  one  of  the  main  industries  of  the  state. 
All  that  has  been  said  gives  great  color  to  the  statements  that 
the  public  works  of  the  state  of  Pennsylvania  were  "  conceived 
without  judgment  and  executed  without  skill,"  that  "  they  were 
laid  out  less  with  a  view  to  their  ultimate  success  than  to  benefit 
private  lands,"  and  that  on  this  account,  better  routes  were  com- 
manded by  private  companies,  which  naturally  "  drew  business 
from  the  state  lines. "^ 

As  early  as  1840,  public  opinion  had  so  changed  regarding 
the  system  of  public  works  undertaken  that  a  proposition  to  sell 
the  works  was  carried  at  a  general  election  by  a  majority  of 
thirty  thousand.  The  works  were  sold  in  two  groups  eighteen 
years  later  for  1 1  million  dollars, ^  or  about  one-sixth  of  their 
net  cost  to  the  state. 

Maryland  began  agitating  the  question  of  constructing  canals 
as    early  as    1824.^     A   Convention  was   held    in  Washington  in 

'  Worthington,  Historical  Sketch  of  the  Finances  of  Pennsylvania,  p.  64. 
"Ibid.,  p.  28. 

3  Hunt's  Merchants'  Magazine,  xx.  p.  269.  *  Jbid.,  p.  258. 

5  Worthington,  Historical  Sketch  of  the  Finances  of  Pennsylvania,  p.  31. 
*McSherry,  History  of  Maryland,  p.  362. 


EARLY    PERIOD  I  5 

1823  regarding  the  construction  of  a  canal  "by  Cumberland  to 
the  coal  banks  on  the  eastern  side  of  the  Alleghenies,  and 
thence  as  soon  as  practicable  to  the  highest  point  of  navigation 
on  the  Ohio  or  Monongahela."  And,  in  accordance  with  the 
recommendations  of  this  Convention,  "an  act  was  passed  by 
Virginia  on  the  27th  of  January,  1824,  and  subsequently  con- 
firmed by  Maryland,  Pennsylvania,  and  the  United  States,  to 
incorporate  the  Chesapeake  and  Ohio  Canal  Company."  By  this 
legislation  Maryland  obtained,  "the  right  of  constructing 
through  any  portion  of  the  District  of  Columbia,  a  lateral  canal, 
to  terminate  at  the  city  of  Baltimore." 

The  United  States  government  becoming  interested  in  this 
canal  enterprise,  subscribed  for  ten  thousand  shares  of  stock. 
And  the  cities  of  the  District  of  Columbia  being  authorized  by 
Congress  to  become  stockholders,  subscribed  for  fifteen  thou- 
sand shares.  The  city  of  Baltimore  becoming  alarmed,  lest 
this  enterprise  should  inure  to  the  benefit  of  the  cities  of  the 
District  of  Columbia  rather  than  to  her  own,  began  agitating  the 
question  of  constructing  a  railroad  to  the  waters  of  the  Ohio  ; 
and  at  a  public  meeting  held  in  the  city  in  February  1827,  the 
road  was  determined  upon.  This  road  was  called  the  Baltimore 
and  Ohio  Railroad.  "To  bestow  an  equal  encouragement  on  the 
railroad  (as  compared  with  the  canal  just  mentioned),  the  state 
subscribed  for  five  thousand  shares  of  its  stock,  and  authorized 
the  city  of  Baltimore  to  subscribe   for  thirty  thousand  shares."' 

The  story  for  Maryland  is  now  practically  the  same  as  that 
for  New  York  and  Pennsylvania.  Enterprise  after  enterprise  was 
projected.  Several  of  the  "schemes  were  never  undertaken:  — 
but  to  those  that  were  commenced,  the  state  subscribed  largely, 
and  the  consequence  was  soon  felt  in  a  heavy  debt,"  which 
in  a  short  while  reached  the  sum  of  16  million  dollars.  In 
1840  many  of  the  companies  failed,  and  the  burdens  fell 
upon  the  state.  The  interest  dues  in  this  year  were  so  great  as 
to  produce  "a  deficit  in  the  treasury  of  nearly  $600,000  —  an 
amount  almost  twice  as  great  as  the  whole  revenue  of  the  state." 

'  McSherry,  History  of  Maryland,  p.  364. 


1 6  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

In  1842,  the  state  defaulted.'  In  the  course  of  time,  the  peo- 
ple became  willing  to  submit  to  taxes  sufficiently  high  to  redeem 
the  honor  of  the  state;  and  in  1848  Maryland  resumed  the  pay- 
ment of  interest.^  At  this  time,  however,  when  "active  steps 
were  taken  to  preserve  the  faith  of  the  state,  the  two  great  pub- 
lic works  seemed  to  recover  their  energies."  From  this  time 
both  were  pressed  forward  under  able  management.  -  The  actual 
funded  debt  of  the  state  at  the  close  of  the  year  1846,  after  the 
state  had  been  bankrupt  four  years,  was  Si 0,5 15,3 11.  Other 
bonds  were  issued,  but  not  negotiated,  to  the  extent  of  ^4,696,- 
473,  making  a  total  of  Si  5,21 1,784.3 

We  now  pass  to  the  consideration  of  the  experiments  of  the 
western  states.  With  the  possible  exception  of  Ohio,  which 
made  a  worthy  attempt  at  efficient  taxation  in  the  early  days  of 
her  experiment,  the  attempts  to  secure  internal  improvements  in 
the  western  states  were  more  extensive  and  at  the  same  time 
even  less  systematic  than  in  the  eastern  states.  This  uniformity 
suggests  the  existence  of  a  common  cause.  This  cause  lies 
chiefly  in  the  fact  that  a  broad  expanse  of  fertile  soil,  suggested 
unlimited  agricultural  resources,  which  could  at  once  be  realized 
upon  if  the  products  of  the  farm  could  be  transported  to  the 
markets  of  the  world.  The  comparative  slowness  of  the  growth 
of  demand,  although  infinitely  greater  in  this  period  than  in  any 
preceding  period  in  the  economic  development  of  the  country, 
was  not  taken  into  account  by  the  pioneers  of  the  prairies.  The 
other  element  in  this  common  cause,  and  by  no  means  a  small 
one,  was  the  absolute  dearth  of  financial  wisdom.  It  is  true 
that  the  failures  of  the  banks  in  New  York  and  Pennsylvania 
had  a  more  or  less  damaging  effect  on  the  internal  improve- 
ments of  those  states ;  but  no  part  of  the  debts  of  those  states 
was  due  to  bonds  issued  in  behalf  of  banking  companies.'*  In 
many  of  the  western  and  southern  states  the  case  was  different. 

^Bankers'  Monthly,  i.  p.  550. 

^See  copy  of  "The  Resumption  Act,"  tbid.,  p.  661. 

^  Bankers'  Monthly ,  i.  p.  460. 

-•  Committee  Reports,  No.  294,  XXVII.  Congress,  3d  session,  pp.  54  and  94.. 


EARLY    PERIOD  1/ 

Here  the  people  thought  that  they  might  become  wealthy  "by 
establishing  banks  under  the  supposition  that  paper  money  was 
necessary  for  the  sale  of  produce."' 

Although  we  cannot  enter  upon  the  history  of  the  banking 
institutions  of  the  western  and  many  of  the  southern  states  dur- 
ing this  period,  it  should  be  observed  that  the  banking  feature  is  a 
very  important  element  in  connection  with  the  internal-improve- 
ment enterprises  of  many  of  these  states,  and  especially  of 
Indiana  and  Illinois.  Michigan  did  not  enter  into  banking  proj- 
ects. She  had,  however,  been  admitted  to  statehood  just  in 
time  to  enter  as  a  state  into  the  internal-improvement  follies  of 
1837.  And  judging  from  the  boldness  of  this  state  of  woods- 
men in  these  undertakings  it  is  fair  to  presume  that  had  the 
state  been  a  few  years  older  she  would  have  tried  all  the  novel- 
ties which  her  sister  states  were  trying.  Indeed,  even  after 
paying  the  high  price  of  her  internal-improvement  venture  dur- 
ing the  years  from  1837  to  1840  she  was  not  content  until  she 
had  tried  the  banking  experiment  later.  But  this  is  not  the 
place  to  give  an  account  of  that  piece  of  disastrous  experience. 

The  success  of  the  Erie  Canal  and  the  active  interest  of  the 
older  states  in  general  furnished  a  great  stimulus  for  the  enter- 
prises of  Ohio,  Indiana,  Illinois  and  Michigan.  The  experience 
of  Ohio,  however,  dates  from  about  the  time  (1826)  of  the  revival 
of  interest  in  internal  improvements  in  Pennsylvania,  brought 
about  as  we  have  seen  through  jealousy  of  the  success  of  New 
York.  The  activity  of  Ohio  in  internal  enterprises  of  these 
times  resembles  that  of  New  York,  in  passing  from  a  conserva- 
tive attitude  at  first  to  one  of  careless  speculation  later  ;  but  dif- 
fers from  the  activity  of  both  New  York  and  Pennsylvania  in 
not  being  mixed  up  with  a  faulty,  if  not  corrupt,  banking 
system. 

The  forward  movement  in  the  experiment  of  Ohio  extends 
over  a  period  of  eighteen  years,  from  1825  to  1843.  The  sys- 
tem of  public  works  of  Ohio  may  be  said  to  date  from  1825, 
although  the  Miami  Canal  was  begun  in  1S20.      The  influence  of 

'  Hunt's  Me}-chants'  Magazine,  xvii.  p.  578. 


1 8  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

the  Erie  Canal  project  of  New  York  upon  Ohio  is  seen  in  the 
fact  that  Governor  Clinton  had  accepted  an  invitation  from  Ohio 
to  be  present  at  the  beginning  of  the  work  of  construction  upon 
her  system  of  internal  improvement,  July  4,  1825.^ 

The  Ohio  Canal,  consisting  of  one  canal  three  hundred  and 
nine  miles  in  length  and  several  branches,  was  completed  in 
1832,  at  a  cost  of  54,244,539.  The  Miami  Canal,  forty-four 
miles  in  length,  begun  in  1820,  was  completed  in  1827  at  a  cost 
of  5457,669.^  The  state  also  constructed  an  extension  of  the 
Miami  Canal  from  Dayton  to  its  junction  with  the  Wabash  and 
Erie  Canal,  and  likewise  constructed  the  Wabash  and  Erie 
Canal,  so  far  as  it  extended  through  Ohio. 

Up  to  1835  the  state  of  Ohio  was  rather  successful  in  canal 
construction.  It  then  had  two  canals,  aggregating  400 
miles  in  length,  which  were  "exceedingly  well  constructed"  and 
had  been  of  "vast  service  to  the  state,"  although  they  had 
"never  yielded  a  net  revenue  equal  to  6  per  cent,  of  their  cost." 3 
The  year  1836  marks  a  great  advance  in  the  internal  improve- 
ment work  of  the  state.  A  great  number  of  railway  companies, 
incorporated  between  1832  and  1836,  asked  at  this  time  for  aid 
from  the  state  to  assist  in  the  construction  of  their  roads,  In 
response  to  these  requests,  the  legislature  in  the  session  of  1836-7 
passed  a  law  to  prosecute  further  undertakings,  and  to  sub- 
scribe to  the  stock  of  turnpike,  railroad  and  canal  companies. 
The  conditions  were  that  after  one-half  of  the  stock  of  a  turn- 
pike or  two-thirds  of  that  of  a  canal  or  railroad  had  been  taken 
by  individuals,  the  object  should  be  approved  by  the  board  of 
public  works,  and  the  state  should  subscribe  for  the  remainder 
of  the  stock.  Under  this  law,  the  state  subscribed  to  turnpike, 
railroad  and  canal  companies,  stocks  amounting  to  the  sum  of 
^2,973, 770.  Of  this  amount,  $1,921,675  represented  a  half 
interest  in  each  of  twenty-six  turnpike  companies. ■♦ 

The  conservative  feature  in  the  Ohio  experiment  consists  in 
the  fact  that  when  the  state  commenced  her  system  of  internal 

^Hunt's  Jferckants'  Magazine,  xxi.  p.  393.  '^  Ibid.,  p.  395. 

""Ibid.  *Ibid.,  p.  396,  397. 


EARLY    PERIOD  1 9 

improvements,  she  "established  a  co-ordinate  and  coextensive 
system  of  taxation."  This  scheme  of  taxation  was  expected  to 
add  annually  to  the  state  funds  a  small  sum  in  excess  of  the 
interest  due  on  the  canal  bonds.  For  the  year  1832  and  each 
succeeding  year,  until  three  years  after  the  completion  of  the 
canal,  the  tax  was  expected  to  "yield  $40,000  annually,  above 
the  sum  of  interest,  and  for  each  year  thereafter  $25,000  excess 
over  the  interest,  until  the  fund  formed  by  these  additional  sums 
should  be  sufficient  to  redeem  the  principal  of  the  loans  cre- 
ated as  they  matured.' 

All  went  on  successfully  under  this  system  till  the  Ohio  and 
Miami  Canals  were  completed  in  1836.  Difficulties  now  arose. 
The  canals  did  not  yield  immediate  returns,  and  the  state  was  at 
the  same  time  committed  to  various  other  enterprises.  So  when 
the  stringency  of  1838-9  came  on,  Ohio,  like  other  states,  found 
herself  in  "the  prosecution  of  extravagant  systems  of  expendi- 
tures." Meantime  the  stocks  of  these  enterprises  were  sinking 
in  value  under  the  increasing  urgency  for  money.  As  it  was 
thought  that  to  abandon  the  works  would  be  to  cause  the  state 
to  suffer  great  loss,  further  loans  were  negotiated.  But  this  also 
could  not  be  done  without  great  difficulty  and  great  loss,^  and 
under  the  great  weight  of  so  many  and  various  projects,  the  state 
was  soon  obliged  to  take  measures  for  relief.  In  March  1843 
accordingly  a  law  was  passed  with  this  end  in  view.  Although 
this  law  made  a  new  appropriation  of  1.5  million  dollars  in 
state  bonds  at  7  per  cent,  "to  complete  the  public  works,  and 
discharge  the  claims  of  contractors,  as  well  as  those  of  turn- 
pike and  other  companies,"  it  prohibited  the  further  increasing 
of  the  state  debt,  compromised  with  railroad  companies  by 
releasing  the  liens  held  against  their  roads,  and  converted  the 
sums  already  loaned  into  stock.  Subscriptions  to  turnpike  com- 
panies were  closed. 3 

This  law  marks  the  close  of  the  forward  movement  in  the 
aiding  policy  of  the  state ;  her  energies  were  henceforward 
occupied  in  taking  care  of  the  debts  contracted.     Although  the 

^Hunt's  Merchants'  Magazine,  xxi.  p.  399.  ^ Ibid.,  p.  400.  ^Ibid. 


20  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

system  of  taxation  established  at  the  beginning  of  her  experi- 
ment was  intended  to  be  "co-ordinate  and  coextensive"  with  the 
system  of  internal  improvements,  it  did  not  prove  to  be  so. 
"In  the  six  years  ending  with  1844,  the  deficit  of  the  interest 
fund  reached  nearly  1.6  million  dollars,"  and  this,  "  notwithstand- 
ing that  the  rate  of  taxation  reached  a  high  figure."' 

Although  the  state  retained  her  stock  in  canals,  railroads 
and  turnpikes,  she  had  a  debt  on  this  account  in  1849  of  S19,- 
173,223.  Moreover,  "  in  addition  to  the  sums  of  money  thus 
borrowed  for  the  construction  of  the  public  works,  the  sinking 
fund  of  nearly  two  million  dollars,  created  by  the  law  of  1825, 
appears  to  have  been  absorbed,  as  well  as  the  proceeds  of  land 
granted  by  Congress,  (and)  sold  for  cash,"  and  also  the  proceeds 
arising  from  the  redemption  of  lands,  "  to  the  extent  of  nearly 
two  million  dollars."^  In  1849,  although  the  tolls  on  all  the 
canals  but  one  were  increasing  gradually,  the  insufificiency  of 
these  tolls  for  the  payment  of  interest  "made  it  annually  neces- 
sary to  aid  the  interest-fund  by  the  canal  tax." 

The  law  of  1825  proves  that  the  people  of  Ohio  did  not 
expect  the  canals  to  pay  for  themselves,  in  a  direct  return  to  the 
treasury  of  the  amounts  invested  in  them  ;  yet  subsequent  events 
show  that  the  taxing  power  had  to  be  applied  much  more  vigor- 
ously than  was  at  first  intended.  In  1850,  the  people  of  Ohio  got 
their  debt  of  nearly  20  million  dollars  under  control.  A  writer 
of  that  year,  after  summing  up  the  taxable  resources  of  the  state, 
and  the  taxes  recently  collected,  asserts  that  "the  ability  and 
willingness  of  the  people  of  Ohio  to  pay  taxes  is  thus  placed 
beyond  question,  and  the  results  of  the  past  year  develop  the 
fact  that  the  limit  of  both  debt  and  taxation  has  been  reached, 
and  that  the  present  amounts  collected  are  not  only  equal  to  the 
payment  of  the  interest,  but  afford  a  considerable  sum  towards 
the  extinguishment  of  the  debt."  3 

Of  all  the  states  that  launched  out  upon  the  sea  of  internal 
improvements  prior  to  1840,  Indiana,  Illinois  and  Michigan  had 
the  most  canvas  spread  and  the  least  ballast ;   and  of  these  three 

'Hunt's  Merchants'  Magazine,  xxi.  p.  408.  '^ Ibid.,  p.  407.  '^IbiJ.,  p.  409. 


EARLY    PERIOD  21 

Illinois  drew  the  least  water.  The  Illinois  and  Michigan  Canal 
of  Illinois,  "  was  conceived  soon  after  the  commencement  of  the 
Erie  Canal  of  New  York,"'  and  originated  in  the  act  of  1823. 
Between  1832  and  1836^  numerous  railroads  were  chartered.  But 
notwithstanding  these  facts,  and  the  fact  that  some  land  had 
been  granted  to  Illinois  by  the  general  government,  for  canal  and 
railroad  purposes  prior  to  18373  the  real  movement  in  Illinois  for 
internal  improvements  did  not  begin  until  this  latter  year.  When 
the  people  of  the  state  became  convinced  of  the  great  possibil- 
ities of  a  general  system  of  improvements  by  the  state,  they 
became  extravagant  in  their  demands.  In  December  1836,  a 
great  convention  met  in  Vandalia,  at  that  time  the  capital  of  the 
state,  on  about  the  same  date  as  the  meeting  of  the  legislature. 
This  convention  was  "composed  of  some  of  the  ablest  men  of  the 
state,  who  favored  a  general  system  of  internal  improvements,  and 
their  object  in  meeting  at  this  time  was  to  exert  an  influence 
upon  the  members  of  the  legislature  to  compel  them  to  support 
and  further  all  proceedings  that  would  serve  to  aid  and  carry  out 
their  cherished  schemes."  The  convention  "  indulged  in  the 
wildest  fantasies  and  fell  into  the  strangest  vagaries."''  In  the 
following  February  the  legislature  passed  an  act  which  formed 
the  basis  of  "  an  extensive  system  of  internal  improvements  by 
means  of  canals  and  railroads  "  and  which  "  not  only  came  fully  up 
to  the  requirements  of  the  convention  ....  but  went  over 
two  millions  and  a  quarter  beyond."  This  act  appropriated 
$10,230,000  for  the  building  of  railroads  and  the  improvement  of 
rivers  ;  $200,000  of  the  first  sums  collected  were  to  be  distributed 
among  those  counties  through  which  no  railroads  extended  to  be 
used  by  them  in  making  wagon  roads  and  bridges. ^  Later  in  the 
session,  the  canal,  then  in  progress  of  construction,  was  added  to 
the  system  of  public  works. ^ 

^Illinois  in  1S37,  p.  55  ;  also  Brown,  History  of  Illinois  (1844),  p.  415. 
^  Ackerman,  Early  Railroads  of  Illinois,  p.  13. 

3  See  United  States  Land  Laws,  House  Ex.  Doc.  47,  pari  3.     XLVL  Congress,  3d 
session,  passim. 

■*  Davidson  and  Stuve,  History  of  Illinois,  p.  435. 

5  Brown,  History  of  Illinois,  pp.  423-427. 

*  Davidson  and  Stuve,  History  of  Illinois,  p.  486. 


22  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

The  act  of  February  1837,  contemplated  the  construction  of 
1 34 1  miles  of  railway.  The  roads  were  to  be  state  works  exclu- 
sively. The  state  spurned  the  idea  of  aiding  private  enterprise  or 
of  waiting  for  private  enterprise  to  build  her  railways.  Of  the 
roads  chartered  by  this  act  only  one  was  ever  completed,  that 
running  from  Meredosia  on  the  Illinois  River  to  Springfield  and 
known  as  the  Northern  Cross  road.  It  was  on  this  road  at  Mer- 
edosia, November  8,  1838,  that  "the  first  locomotive  that  ever 
turned  a  wheel  in  the  great  valley  of  the  Mississippi"  was  put  in 
operation.' 

The  work  of  construction  on  the  internal  improvements  was 
begun  in  every  part  of  the  state  at  the  same  time,  both  at  the 
termini  of  the  roads  and  at  intermediate  points,  so  that  no  part 
of  the  state  would  feel  that  any  other  part  was  given  any  advan- 
tage. Excepting  the  single  road  already  mentioned,  work  upon 
all  the  roads  was  abandoned  in  less  than  three  years. 

The  absolute  folly  of  the  Illinois  plan  of  securing  public 
works  may  be  fully  understood  when  it  is  known  that  the  popu- 
lation of  the  state  in  1835  ^^.s  only  271,727  and  the  taxable 
wealth  of  the  state  only  $58,889,525.^  It  is  thus  seen  that  atone 
session  the  legislature  appropriated  for  internal -improvement 
purposes  sums  equal  to  more  than  one-sixth  of  the  entire  wealth 
of  the  state ;  and  this  was  done,  moreover,  at  a  time  when  the 
state  was  in  debt  and  had  "no  available  means  of  her  own. "3 
The  ill  success  of  most  of  the  enterprises,  the  low  price  received 
for  the  bonds  of  the  state,  and  the  prospects  of  an  enormous 
addition  to  the  debt  of  the  state  in  a  very  short  time,  with  no 
corresponding  addition  to  her  resources,  had  the  natural  effect 
upon  the  people  of  the  state.  This  effect  is  shown  in  an  extra 
session  of  the  legislature  for  the  purpose  of  disavowing  its  own 
foolish  act  of  1837.  ^^  February  1840,  just  three  years  from 
the  beginning  of  the  internal-improvement  enterprises,  two  acts 
were  passed  which  resulted  in  the  abandonment  of  all  railroad 
work  in  the  state. 

'  Davidson  and  Sinw  6,  History  of  Illinois,  p.  435.  ^  Ibid.,  p.  438. 

"•  Brown,  History  of  Illinois,  p.  419. 


EARLY    PERIOD  23 

At  this  time,  if  all  the  work  done  on  the  Illinois  and  Michi- 
gan Canal  before  the  state  assumed  the  work  of  its  further  con- 
struction is  included,  the  state  could  boast  of  only  105  miles  of 
canal  and  twenty-six  of  railroad.'  In  1841  the  canal  was  "about 
half  done,"  and  of  the  1341  miles  of  railroad  contemplated  in 
1837  "fifty-five  miles  .  .  .  [were]  completed  and  all  the 
rest  of  the  work  abandoned."^  The  only  line  of  railroad  com- 
pleted cost  one  million  dollars  ;  and  because  it  could  not  pay 
expenses  it  was  sold  a  few  years  later  for  $100, 000. ^  The  out- 
standing debt  of  the  state  in  1841  was  $13,257,292.  Of  this 
three  million  dollars  was  incurred  in  assisting  banking  institu- 
tions :  nearly  all  of  the  remainder  was  chargeable  to  internal 
improvement. 

If  we  should  insert  "Indiana"  for  "Illinois"  in  the  account 
just  given  and  change  the  dates  slightly  we  should  almost  have 
the  history  of  the  internal-improvement  experiment  in  that  state. 
In  1832,  Indiana  had  authorized  a  loan  of  $200,000  for  the 
Wabash  and  Erie  Canal,  and  in  1834  had  chartered  a  banking 
institution  with  ten  branches  in  which  she  had  taken  stock  to  the 
extent  of  $1,390,000.*  The  selling  of  the  bonds  of  the  state  for 
both  of  these  purposes  and  the  large  discounts  of  the  new  bank- 
ing institution  were  the  elements  of  the  speculative  mania  notice- 
able in  Indiana  prior  to  1836.  So,  when  the  internal-improvement 
epidemic  struck  the  state  in  1836  the  result  might  have  been  fore- 
told. The  state  passed  a  law  January  7,  1836,  authorizing  a  loan 
of  ten  million  dollars  for  internal-improvement  purposes.  Of  this 
amount  6.2  million  dollars  was  devoted  to  canals,  $50,000  to  the 
improvement  of  White  River,  1.3  million  dollars  to  one  railroad 
and  $4,450,000  to  two  turnpikes. ^  As  in  Illinois,  operations  on 
all  the  works  were  begun  simultaneously ;  and  like  Illinois  and 
Michigan,  Indiana  had  only  prospective  funds  for   the   payment 

'Tanner,  Description  of  the  Canals  and  Railroads  of  the  United  States  (1840) 
p.  198. 

^  Committee  Reports,  No.  2q6,  XXVII.  Congress,  3d  session,  p.  89. 
3  Davidson  and  Stuve,  History  of  Illinois,  p.  447. 
''  Cotnmittee  Reports  No.  sgd,  XXVII.  Congress,  3d  session,  p.  87. 
5 Hunt's  Merchants'  Magazine,  xxi.  p.  152. 


24  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

of  the  principal  and  interest  of  her  loan.  It  was  soon  "evident 
that  20  million  dollars  would  not  more  than  half  suffice  to  com- 
plete any  portion  [of  the  works]  in  consequence  of  the  necessity 
of  spending  all  the  money  that  could  be  got  in  all  parts  of  the 
state  at  once."' 

By  1839  the  state  had  exhausted  her  credit,  work  on  the 
internal  improvements  was  for  the  time  suspended,  and  the  Board 
of  Internal  Improvements  itself  was  discontinued  the  next  year. 
The  bonds  of  the  state  issued  on  account  of  internal  improve- 
ments amounted  to  ^11,322,000,  which  sold  for  ^9, 582, 133.^ 
Including  the  bonds  issued  for  the  state  bank  and  those  issued 
for  other  small  items,  the  total  bonds  of  the  state  amounted  to 
Si 4,057,000.  Of  this  debt  the  state  lost  directly  through  "wild- 
cat" banks  and  railroad  companies  $3,559,791.^  In  September 
1 84 1 ,  the  outstanding  debt  of  the  state  was  5 1 2,75  i  ,000,  of  which 
all  but  about  three  million  dollars  was  due  to  internal  improve- 
ments.'' At  this  time  instead  of  having  anything  in  the  form  of 
an  income  from  internal  improvements,  Indiana  had  to  hypothe- 
cate ^665,000  in  the  bonds  of  the  state  "to  raise  means  to  pay 
the  interest  on  the  internal-improvement  debt.''^  Of  these  bonds 
hypothecated  only  the  sum  of  $29,000  were  sold.^  The  state 
could  not  collect  taxes  levied  and  from  1840  to  1847  made  no 
further  effort  "  to  pay  the  state  interest.  However,  the  receipts 
of  the  outstanding  treasury  notes  for  the  state  dues  annually 
diminished  the  amount  [of  the  debt]  and  cleared  the  way  for 
the  healthy  operation  of  the  tax  law  subsequently  enacted."'' 

In  1846  a  settlement  of  the  debt  was  effected.  A  law  was 
passed  compromising  with  the  bondholders  of  the  Wabash 
Canal ;  the  canal  and  its  lands  were  placed  in  the  hands  of  trus- 
tees who  were  to  complete  it  with  funds  subscribed  for  that 
purpose  by  the  bondholders.  The  state  was  then  to  provide  for 
one-half  of  the  old  debt  and  one-half  of  the  arrears  in  interest 
by  taxation  ;  the  other  half  of  the  debt  and  of  the  interest  were  to 

'  Hunt's  Merchants'  AIagazi?te,x\\.  p.  152.  ^  Ibid.,  p.  154.  ^ Ibid.,  p.  155. 

^  Commiitee  Heports,  No.  2g6,  XXVII.  Congress,  3d  session,  p.  87.     ^  Ibid. 
*  Hunt's  Merchants'  Alagazine,  xx'i.  p.  156.  ''Ibid, 


EARLY    PERIOD  25 

be  a  charge  upon  the  canal. ^  About  1850  private  companies 
took  up  the  work,  and  several  roads  were  built  and  successfully 
operated. 

The  internal -improvement  experiment  in  Michigan  was  as 
short  lived  as  that  of  Indiana  and  Illinois.  And  in  comparison 
with  these  states,  in  proportion  to  her  population  and  taxable 
wealth,  the  magnitude  of  her  scheme  was  quite  as  great  as  those 
of  the  older  states.  It  is  in  the  matter  of  releasing  herself  from 
internal-improvement  enterprises  that  Michigan  surpassed  both 
Indiana  and  Illinois.  It  is  not  intended  here,  however,  to  con- 
nive at  the  partial  repudiation  by  the  state  of  portions  of  her 
debt.^ 

The  chief  general  causes  for  speculative  excitement  were  the 
same  in  Michigan  as  in  other  western  states  ;  there  the  sales  of 
public  lands  in  1836  amounted  to  five  million  dollars,  while  all 
the  sales  of  public  lands  from  18 18  to  1848  amounted  to  only 
nine  million  dollars. 3  The  desire  for  internal  improvements  in 
Michigan  was  as  great  as  anywhere  else  in  the  West.  This  great 
anxiety  resulted  in  the  act  of  March  21,  1837,  which  contem- 
plated the  construction  of  557  miles  of  railway,  231  miles  of 
canal,  and  the  improvement  of  321  miles  of  river  navigation. 
The  act  also  authorized  a  loan  of  five  million  dollars  for  these 
purposes.-* 

Upon  the  works  undertaken- — five  railroads,  two  turnpikes, 
three  canals,  and  the  improvement  of  four  rivers  —  the  state  had 
expended  by  November  1847,  ^he  sum  of  $3,541,552,  and  had 
issued  bonds  to  the  extent  of  $5,943,324.5  Because  of  the 
failure  of  certain  purchasers  of  the  state  bonds  to  remit  the 
regular  payments  in  1842,  the  public  works  of  the  state  had  to 
be  temporarily  abandoned.^  Many  of  the  smaller  works  were 
abandoned  for  all  time.  Only  two  main  lines  of  railway,  "  the 
Central"   and   "the   Southern,"  were   afterwards  continued  ;   but 

'Hunt's  Merchants'  Magazitie,  xxi.  p.  581. 

^Scott,  The  Repudiation  of  State  Debts,  pp.  161-164. 

3  Hunt's  Merchants^  Magazine,  xxii.  p.  132.  ^ Ibid. 

^  Ibid., -p.  134.  ^Ibid.,  p.  136. 


26  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

these  only  under  many  difficulties.  At  the  close  of  1845,  j'^st  a 
few  months  before  the  legislature  disposed  of  these  roads  to 
private  companies,  146  miles  of  the  Central  Railroad  had  been 
completed  at  a  cost  of  ^2, 238, 289,  and  68  miles  of  the  Southern 
had  been  completed  at  a  cost  of  ^1,125,590.' 

Because  the  debt  ($5,611,000)''  of  the  state  was  pressing 
heavily  upon  her  population,  then  304,278,  possessing  taxable 
property  to  the  extent  of  only  $28,922,000,  it  was  decided  early 
in  1846  to  dispose  of  the  roads  to  private  companies.  For  the 
Central  road  the  state  received  two  million  dollars  in  state  indebt- 
edness, or  about  90  cents  on  the  dollar  of  its  cost,  and  for  the 
Southern  road  $500,000,  or  little  more  than  43  per  cent,  of  its  total 
cost. 3  The  gross  income  of  both  these  roads  for  the  years  1844 
and  1845  was  only  $536,992,  or  less  than  1%  per  cent,  on  the 
sum  invested.  By  the  terms  of  the  sale  the  Central  Railroad 
Company  had  to  complete  its  road  from  Kalamazoo  to  Lake 
Michigan  within  three  years  from  the  date  of  purchase  and  to 
reconstruct  within  two  years  the  fifty  miles  west  of  Detroit. 
Similar  requirements  were  made  of  the  Southern  company. 
After  these  companies  took  up  the  work  of  construction,  the 
roads  were  pushed  rapidly  to  completion. *  In  disposing  of  her 
roads  the  state  of  Michigan  received  a  very  much  greater  per- 
centage of  the  original  cost  of  construction  and  imposed  obliga- 
tions upon  the  purchasing  companies  much  more  favorable  to  the 
state  than  had  either  Indiana  or  Illinois. 

The  following  states  had  in  1841  internal-improvement  debts 
ranging  from  one  to  six  million  dollars :  Georgia,  Kentucky, 
Tennessee,  Massachusetts,  South  Carolina,  and  Virginia.  The 
situation  of  internal-improvement  matters  in  these  states  in  1841,^ 
just  after  the  business   depression  of  that   period   had  reached 

'  These  sums  include  "  furniture  of  the  roads  and  shops,"  "materials  on  hand" 
and  "  10  per  cent,  interest  during  construction." — Hunt's  Merchants'  Magazine,  xxii, 
p.  138. 

^Committee  Reports,  No.  sgb,  XXVII.  Congress,  3d  session,  p.  80. 

3  Hunt's  Merchants'  Magazine,  xxii.  pp.  138-139. 

*  Ibid.,  xiv.  p.  22. 

^Committee  Reports,  No.  2q6,  XXVII.  Congress,  3d  session,  pp.  50-100. 


EARLY    PERIOD  2"] 

the  nadir  point,  may  be  briefly  summarized.  Georgia  possessed 
only  one  railroad,  145  miles  in  length,  the  grading  of  which  was 
"  nearly  completed."  For  this  bit  of  a  road  the  state  had  become 
indebted  to  the  extent  of  $1,390,000.  The  debt  of  Kentucky 
amounted  to  $3,085,000,  and  had  been  "created  for  the  con- 
struction of  turnpike  roads  and  slack-water  navigation."  The 
former  were  constructed  by  companies  in  which  the  state  "  gen- 
erally subscribed  one-half  of  the  stock  ;  "  the  "  river  and  lock 
navigation  for  steamboats  "  was  in  each  instance  "  exclusively  " 
a  state  work.  Of  the  one  thousand  miles  of  turnpike  roads 
undertaken,  five  hundred  miles  were  completed  and  were  paying 
tolls.  The  cost  per  mile  ranged  "  from  $4200  to  $7800  exclu- 
sive of  bridges."  Of  "river  and  lock  navigation  "  there  was  to 
be  "completed  by  the  first  of  January,  1842,  290  miles." 

Tennessee  had  assisted  a  great  number  of  turnpike  and  a  few 
navigation  companies.  The  works  were  at  this  time  (1841) 
described  partly  as  "  unfinished  "  or  "  utterly  worthless,"  and 
partly  as  "well-advanced"  and  "completed."  These  works  in 
such  various  states  of  advancement  had  cost  the  state  $3,398,000. 

Massachusetts  began  to  aid  railroads  in  1837,  t)ut  confined 
her  gifts  to  only  a  few  roads,  taking  stock  in  one  to  the  amount 
of  $995,000;  the  state  granted  in  all  $6,044,555  o^  aid.'  But  it 
has  been  argued,  and  seemingly  very  pertinently,  that  this  activity 
of  the  state  was  needless,  because  during  the  time  in  which  the 
state  invested  six  million  dollars  private  enterprise  invested  the 
sum  of  24  million  dollars  in  railroad  undertakings  in  the  state. ^ 
Even  if  at  first  the  state  deliberately  entered  into  the  assistance 
of  railroad  construction  as  a  bit  of  paternalism,  it  does  not  seem 
that  she  chose  to  keep  up  the  experiment  indefinitely ;  the 
amount  of  six  million  dollars  represents  the  limit  of  her  railroad 
ventures.  In  1841  the  state  works  were  nearly  all  in  "successful 
operation;  "  two,  however,  were   "  not  completed." 

In  South  Carolina  nearly  four  million  dollars  of  the  entire  debt 
of  $5,691,000  was  contracted  for  internal  improvements  which 
were  "  partially  abandoned  "   and  partially  "completed." 

•  Hunt's  Merchants''  Magazine,  xvii.  p.  584.  ^  Ibid. 


28  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

Virginia  had  undertaken  to  assist  more  than  fifty  turnpike 
companies  besides  several  railroad  and  river  improvement  com- 
panies, and  had  contracted  a  debt  on  this  Account  of  ^4,037,000. 
In  1 84 1  there  seems  to  have  been  little  or  nothing  accomplished.' 

§  4.  Only  a  word  of  further  analysis  of  the  debts  of  the 
states  at  this  time  is  necessary  before  taking  account  of  the  peti- 
tion of  several  of  the  states  to  the  general  government  for  relief 
from  the  burdens  brought  upon  themselves  by  internal  improve- 
ment and  banking  experiments.  The  whole  of  the  debts  of  the 
states  in  1841  (  $231,644,111  )^  was  not  contracted  for  internal 
improvements.  Nearly  50  million  dollars  were  contracted  wholly 
for  the  purpose  of  assisting  banking  institutions  or  for  entering 
directly  into  the  banking  business.  The  15.4  million  dollar  debt 
of  Alabama,  the  seven  million  dollar  debt  of  Mississippi,  and  the 
two  million  dollar  debt  of  Arkansas  were  for  banking  purposes 
alone.  The  great  debt  $23,985,000  of  Louisiana,  with  the  excep- 
tion of  only  $256,000,  was  incurred  to  assist  banking  institutions 
and  one  association  of  planters  in  the  state.  Of  the  small  debt 
of  $842,261  of  Missouri,  the  bank  debt  was  $272,273,  while  the 
internal  improvement  debt  was  only  $20,000  ^ 

§5.  Possibly  the  most  instructive  feature  of  this  extraor- 
dinary exhibition  of  paternalism  in  nineteen  of  our  states, 
whether  in  aiding  or  in  constructing  canals  or  railways  or  in 
aiding  banking  institutions,  is  the  attitude  which  several  states 
took  toward  the  general  government  upon  becoming  conscious 
of  their  inability  to  carry  out  their  enterprises.  This  attitude  is 
shown  in  an  appeal  made  by  them  to  the  general  government  for 
relief.  Citizens  from  Pennsylvania,  Maryland,  Ohio,  and  Vir- 
ginia sent  memorials  to  Congress  asking  that  the  United  States 
government  assume  the  payment  of  the  debts  of  the  states  to  the 
extent  of  200  million  dollars. "t  Whether  or  not  there  is  any 
special  praise  due  to  the  western  states  generally  and  to  most  of  the 

'  Committee  Reports,  No.  2g6,  XXVII.  Congress,  3d  session,  pp.  63-65. 
'Ibid.,  p.  106.  '^ Ibid.,  pp.  50-100.  '■Ibid.,  pp.  17-46  and   459-461. 


EARLY    PERIOD  ,  29 

southern  states  for  not  sending  memorials  to  the  same  effect,  it 
may  safely  be  conjectured  that  had  a  bill  been  passed  for  the 
assumption  of  the  debts  of  all  the  states  they  would  have  readily 
accepted  the  gift. 

The  memorials  of  the  states  demonstrate  that  in  this  case  a 
little  paternalism  created  a  desire  for  a  great  deal  more  ;  the 
only  difference  was  that  there  was  a  change  in  direction.  But  if 
the  states  had  succeeded  in  having  their  debts  assumed  through 
their  far-fetched  reasoning  that  the  assumption  of  the  state 
debts  in  1790,  and  that  the  distribution  among  the  states  of  the 
"  surplus  "  in  the  form  of  a  loan  in  1836  established  a  precedent 
for  what  they  were  then  asking/  what  might  have  been  expected 
in  the  future  !  Surely  there  would  have  been  a  precedent  for 
assuming  the  debts  of  the  states  under  any  and  all  circumstances, 
the  purposes  for  which  the  debts  had  been  incurred  being  utterly 
disregarded. "^ 

^6.  The  disastrous  conclusion  of  this  period  of  state 
activity,  it  is  properly  stated,  marks  the  rise  of  great  industrial 
corporations  as  a  national  feature  in  the  United  States. ^  Whether 
or  not  this  is  a  matter  to  be  greatly  solicitous  about,  there  has 
not  yet  been  time  enough  to  demonstrate.  There  is  a  possibilit}' 
of  course,  just  as  there  is  in  all  cases  of  violent  changes  of 
policy,  that  the  reaction  against  state  activity  has  gone  too  far ; 
there  is  enough  evidence  accessible  to  prove  that  in  more  than 
one  case  both  the  states  and  the  nation  have  suffered  wrongs  at 
the  hands  of  voracious  corporations.  But  in  many  of  these 
cases,  as  in  New  York,  Pennsylvania,  Indiana,  Michigan,  and 
Missouri,  and  the  national  government,  the  crime  of  defrauding 
the  public  has  been  a  work  in  which  two  parties  were  interested. 
The  principals,  it  is  true,  have  been  the  corporations  ;  but  the 
trusted  representatives  of  the  people  have  shared  in  the  spoils. 
Furthermore,  there  is  not  a  single  case  in  the  whole  list  of  the 
states  attempting  the   construction  or  the  assistance   in  the  con- 

'  Cofiimittee  Reports,  No.  2q6,  XXVII.  Congress,  3d  session,  p.  14. 

-See  the  various  items  of  debt  in  many  of  the  states.     Ibid.,  pp.  50-101. 

3  Adams,  Public  Debts,  p.  339. 


30  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

struction  of  public  works  between  1825  and  1S40  in  which  there 
is  evidence  of  commanding  administrative  ability.  In  the  case 
of  almost  all  there  is  an  absence  of  what  can  be  called  immacu- 
late honesty.  It  may  be  objected,  indeed,  that  many  corpora- 
tions default  and  thereby  bring  burdens  upon  thousands.  But, 
it  may  be  answered,  that  the  failure  of  a  corporation  can  affect 
only  a  comparatively  small  number,  whereas  the  failure  of  a  state 
affects  all  within  it. 

^7.  Before  taking  up  again  the  thread  of  the  story  directly 
concerning  the  internal  improvements  of  Missouri,  it  is  neces- 
sary for  the  complete  understanding  of  the  policy  of  the  state 
in  this  matter  to  cast  a  brief  glance  at  two  other  lines  of  activ- 
ity of  more  or  less  moment  in  which  the  state  became  interested 
in  her  corporate  capacity  between  1837  and  1844.  Although 
Missouri  proceeded  no  further  in  the  matter  of  internal  improve- 
ments in  1836-7  than  the  appointment  of  a  Board  and  the 
negotiation  of  a  loan  of  ^20,000  for  its  expenses,  she  did  not 
at  this  time  hold  aloof  from  banking — that  other  enterprise  in 
which  so  many  of  the  states  involved  themselves.  It  has  been 
mentioned  that  in  his  message  of  1836  Governor  Boggs  recom- 
mended the  establishment  of  a  state  bank  with  the  capital 
allowed  by  the  constitution.  Such  a  bank  he  thought  would 
"afford  ample  means  not  only  for  commercial  purposes,"  but 
would  enable  the  state  "to  prosecute  a  system  of  internal 
improvements  commensurate  with  her  wants."'  Here  is  seen 
the  same  erroneous  view  of  banking  as  existed  in  other  states  at 
this  time.  And  since  throughout  the  West  in  those  times,  a 
bank  which  was  not  a  bank  of  issue  was  no  bank  at  all,  the 
words  of  the  governor  indicate  the  same  mistaken  idea  of  the 
real  nature  of  money  that  existed  in  all  the  surrounding  states. 
The  history  of  the  bank  shows  "how  it  afforded  ample  means" 
for  running  the  state  into  debt. 

The  constitution  of  the  state  permitted  the  establishment  of 
one  banking  institution  with  five  branches  having  a  total  capital 
^  Senate  Journal,  1837,  p.  25. 


EARLY    PERIOD  3  I 

of  five  million  dollars,  one-half  of  which  should  be  reserved  to 
the  state.'  In  accordance  with  this  provision  an  act  was  passed 
February  2,  1837,  authorizing  the  establishment  of  such  an 
institution.  From  the  very  beginning  of  this  banking  experi- 
ment, an  excess  of  administrative  inefficiency  on  the  part  of 
the  state  concerning  it  was  manifest.  In  less  than  three  years 
after  it  began  operations  a  special  committee  had  to  be  appointed 
to  investigate  the  relations  existing  between  it  and  the  state. 
This  committee  reports:  "It  is  impossible  from  the  correspond- 
ence between  the  executive  and  the  bank  to  ascertain  the  num- 
ber or  the  amount  of  bonds  outstanding  or  when  issued  ;  either  the 
evidence  has  been  lost  or  not  preserved  or  not  communicated. 
It  seems  from  what  is  communicated  that  it  was  only  necessary 
to  ask,  and  the  governor  issued,  and  this  sometimes  without  a 
return  of  the  bonds  in  lieu  of  which  the  new  bonds  were  asked. 
The  correspondence  shows  the  grossest  want  of  care  in 
the  execution  of  the  acts  and  in  the  management  in  the  interests 
of  the  state." ^  That  this  institution,  or  at  least  its  support  by 
the  state,  was  superfluous  and  uncalled  for  is  demonstrated  by 
the  fact  that  up  to  1844,  seven  years  after  it  began  business, 
even  with  the  failure  to  negotiate  more  than  a  small  part  of  the 
bonds  issued  to  it  for  the  stock  of  the  state,  it  had  "more  capi- 
tal than  it  could  employ." 3  And  had  the  bonds  been  sold  the 
money  arising  therefrom  would  have  remained  "idle  in  the 
vaults  of  the  bank;"  and  the  state  would  have  been  "compelled 
to  pay  interest  on  the  same  amounting  to  ^133,080  annually,  a 
sum  almost  equal  to  the  annual  revenue  of  the  state,  without  any 
means  of  so  doing  but  by  a  direct  and  oppressive  taxation."'' 

To  illustrate  the  value  of  such  an  institution  it  is  sufficient 
to  state  that  the  dividends  on  the  stock  (^272,263)  owned  by 
the  state  in  her  own  right  from  the  time  the  bank  began  busi- 
ness in  1838  to  November  i,  1844,  amounted  to  only  ^78,094, 
while  the  interest  on  the    bonds   issued   for  this  stock  amounted 

^Constitution  of  the  State,  Article  8,  Laws  of  Missouri,  184s,  p-  4i- 

^  Auditor^ s  Report.  1883-4,  part  2,  pp.  48-49. 

^  Senate  Journal,  1845,  Appendix,  p.  178.  *  Ibid. 


32  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

to  ;gi  10,949.'  The  funds  ($675,667)  invested  in  the  bank  for 
school  purposes  suffered  "in  like  proportion;"  and  there  conse- 
quently resulted  a  deficit  and  not  a  surplus  for  this  important 
object.  From  these  facts  it  would  seem  that  the  examining 
committee  of  this  year  was  wasting  its  time  in  raising  the  ques- 
tion "whether  or  not  the  bank  had  answered  the  purposes  for 
which  it  was  created;"  and  especially  does  it  seem  so  when  we 
find  that  they  state  further  that  "the  history  of  the  bank  proves 
most  conclusively  that  it  can  never  become  a  source  of  revenue 
to  the  state." 

Other  troubles  followed  in  the  course  of  the  history  of  this 
bank.  At  one  time  the  sum  of  $120,900  was  stolen.^  The 
losses  to  November  i,  1854,  from  the  beginning  of  the  bank 
January  i,  1838,  were  $459,658,  while  the  aggregate  net  profits 
for  the  same  period  amounted  to  only  $2,362,61 1.^  Had  the 
bank  lost  no  money  its  net  profits  up  to  1853  would  have  been 
$2,822,269.  The  efficiency  of  the  administration  of  the  bank 
can  be  appreciated  therefore  by  the  fact  that  out  of  every  six 
dollars  it  made  it  lost  one.  The  total  loss  sustained  by  the 
state  up  to  1853  growing  out  of  her  connection  with  the  bank 
amounted  to  $220,551.93.''  Nothing  extraordinary  seems  to 
have  developed  in  the  history  of  the  bank  between  1853  and 
the  date  of  its  reorganization  as  a  national  bank  in  1866.5  It 
of  course  struggled  through  the  panic  of  1857  and  the  follow- 
ing depression  like  other  banks.  When  the  state's  quota  of 
stock  was  sold  in  1866  at  a  premium  of  $8.50  on  the  share  the 
state  realized  a  small  profit,  thus  partially  offsetting  her  former 
losses.^  However,  as  an  experiment  in  state  activity  and 
especially  as  an  investment  scheme  which  was  to  "afford  ample 
means"  for  internal-improvement  projects,  the  bank  experiment 
of  Missouri  was  a  most  signal  failure. 

^  Senate  Journal,  1843,  Appendix,  p.  182. 
''Ibid.  1831,  Appendix,  p.  26  et  seq. 
^Ibid.  i8ss.  Appendix,  pp.  94  and  112. 
''Ibid.  1853,  Appendix,  p.  45. 
^  Laws  of  Missouri,  /866,  p.  14. 
^Auditor's  Report,  1883-4,  part  2,  p.  55. 


EARLY    PERIOD  33 

§8.  Not  disheartened  at  the  limping  success  of  her  bank- 
ing project  as  it  appeared  in  the  early  forties,  the  state  of  Mis- 
souri attempted  at  this  time  a  small  industrial  undertaking  in  the 
form  of  a  tobacco  warehouse  in  the  city  of  St.  Louis. ^  Having 
no  money  in  the  treasury  the  state  issued  $25,000  in  ten-year 
10  per  cent,  bonds  for  this  purpose.  The  warehouse  opened 
for  business  October  24,  1843.^  ^^  the  end  of  the  first  year  it 
had  earned  only  a  small  fraction  of  the  annual  interest  ($2500) 
on  the  bonds  issued  for  its  construction.  Notwithstanding  the 
recommendations  of  the  committee  on  the  examination  of  the 
warehouse  (1845)  that  the  experiment  be  continued  "to  protect 
the  planters  against  exorbitant  charges"  and  "to  prevent  a 
monopoly,"  the  state  warehouse  had,  from  the  report  of  this  com- 
mittee, charged  more  for  the  same  service  during  most  of  the 
year  1844  than  had  the  Planters'  warehouse  of  the  same  city. 
During  1843,  however,  the  state  warehouse  had  charged  a  little 
less.3  The  anuual  fees  arising  from  the  warehouse  enterprise 
during  the  first  five  years  of  its  existence  seldom  amounted  to 
enough  in  any  year  to  pay  more  than  one-third  of  the  year's 
interest  on  the  bonds  issued  for  its  construction. ■♦  Consequently 
the  committee  appointed  in  1848  to  examine  the  condition  and 
prospects  of  the  undertaking  had  "no  hesitation  in  recommend- 
ing the  sale  or  the  lease"  of  the  warehouse.  In  March  1849,  ^ 
law  was  passed  authorizing  the  sale  in  order  to  get  the  state  free 
from  an  unprofitable  enterprise.  The  warehouse  was  not  finally 
disposed  of,  however,  till  1866;  it  then  brought  $132,000.  Just 
how  much  expense  it  had  been  to  the  state  after  1849  is  not 
a])parent.5 

§  9.  For  the  short  space  of  two  years  the  state  remained 
comparatively  free  from  industrial  undertakings.  She  then  began 
her  experiments    in  the    matter  of  aiding  railways.      But  before 

'  Laws  0/ Missouri,  1843. 

-  Settate  Journal,  1843,  Appendix,  p.  24.  '^ Ibid.,  p.  25. 

^  House  Journal,  i84q.  Appendix,  p.  256. 

"i  Laws  of  Missouri,  i86j-6,  p.  199;  also  Governor's  Message,  Senate  Journal, 
/S67,  p.  22. 


34  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

beginning  the  account  of  this  experiment  it  will  be  necessaiy  to 
complete  the  account  of  her  preliminary  attempts  in  the  matter 
of  obtaining  internal  improvements.  The  attitude  of  the  state 
from  1839  to  1 85  I  can  now  be  very  easily  understood  after  the 
cursory  glance  given  to  the  experiences  of  other  states  and  to 
her  own  attempts  in  other  matters  than  that  of  securing  trans- 
portation facilities. 

During  the  session  of  the  legislature  following  the  one 
(1836-7)  which  chartered  so  many  railroad  companies  to  no 
purpose,  a  proposition  to  assist  a  single  company  was  for  a  time 
favorably  considered.  The  railroad  contemplated  was  to  con- 
nect St.  Louis  with  the  Iron  Mountain.  The  people  of  Missouri  at 
this  time  entertained  great  hopes  of  the  immediate  development 
of  this  great  deposit  of  iron  ore.  No  aid  was  granted  to  the  enter- 
prise proposed,'  but  a  very  important  step  was  taken  at  this  ses- 
sion in  the  matter  of  internal  improvements  —  aboard  of  internal 
improvements  was  established.^  The  constitution  of  the  state 
provided  that  internal  improvements  "should  forever  be  encour- 
aged" by  the  government  of  the  state,  that  it  should  be  the 
duty  of  the  general  assembly  as  early  as  possible  to  ascertain 
the  most  suitable  objects  for  improvement  in  the  matter  of  roads 
and  navigable  rivers,  and  to  provide  "by  law  for  a  systematic 
and  economical  application  of  the  funds  applied  to  these 
objects."  3  In  accordance  with  these  provisions,  the  Board  of 
Internal  Improvements  was  appointed  in  1838.  It  consisted  of 
five  members,  two  serving  two  years  and  three  serving  four  years. 
The  duties  of  this  board  were  stated  to  be  "a  general  supervision 
and  control  over  all  state  roads,  railroads,  slack-water  naviga- 
tion, or  canals  that  might  be  authorized  by  law,  wherein  the  state 
should  own  or  reserve  any  interests  or  rights,  immediately  or 
prospectively."  Their  work  was  not  only  to  supervise  in  a  gen- 
eral way;  through  their  agencies  they  were  "to  construct  places 
of  depot,  bridges,  walls,  culverts,  viaducts,  and  all  other  works 
necessary  to  carry  into  effect  the  improvements  authorized." 

^  Senate  Journal,  iSjS-g,  pp.  208-209. 

'Laws  of  Missouri,  /83S-Q,  p.  67.  3See  Constitution,  /did.,  1843,  p.  41. 


EARLY    PERIOD  35 

As  a  matter  of  security  on  the  part  of  the  state,  bonds, 
oaths,  and  the  like  were  required  from  each  of  the  members  of 
the  board ;  and  no  member  could  own  real  estate  within  two 
miles  of  any  of  the  public  works  under  construction.  As  a 
remuneration  for  performing  the  tasks  of  this  office,  each  mem- 
ber was  to  "receive  three  dollars  for  each  day  of  service  while 
actually  emploved  in  the  duties  of  his  office." 

The  funds  for  the  prosecution  of  the  works  under  the  direc- 
tion of  this  board,  like  the  similar  funds  of  Indiana,  Illinois, 
Michigan,  and  other  states,  were  all  of  a  prospective  character. 
They  consisted  ( i )  of  all  moneys  that  might  be  raised  by  the 
sale  of  stocks  or  by  loans,  (2)  of  all  appropriations  for  such 
objects,  (3)  of  the  proceeds  from  tolls  and  rents  of  completed 
works,  (4)  of  proceeds  from  lands  granted  by  Congress  for 
aiding  such  works,  (5)  of  net  proceeds  of  public  land  entries, 
(6)  of  all  grants  or  donations  that  might  be  received  from  indi- 
viduals or  corporations,  (7)  of  all  profits  from  publications 
regarding  internal-improvement  matters  in  the  state,  (8)  of  all 
rents  of  water  or  steam  power,  and  (9)  of  all  other  proceeds 
arising  in  any  way  from  the  construction  or  lease  of  such  works. 

It  can  thus  be  seen  that  no  funds  for  the  prosecution  of  the 
work  of  this  board  were  already  in  the  hands  of  the  state.  The 
one  fund,  "the  road  and  canal  fund,"  from  which  there  was  now 
a  possibility  of  receiving  a  small  sum  for  internal-improvement 
purposes,  was  rendered  inaccessible  by  the  internal-improvement 
act'  February  ii,  1839,  which  declared  that  this  "fund"  should 
never  be  used  for  purposes  other  than  those  for  which  it  was  origi- 
nally intended.  This  "fund"  was  constituted  at  the  time  of  the 
formation  of  the  state  government.  It  consisted  of  3  per  cent, 
of  the  proceeds  of  the  sales  of  all  the  public  lands  in  the  state. 
These  proceeds  were  to  be  applied  to  the  construction  of  "public 
roads  and  canals"  within  the  state  and  under  the  direction  of  the 
lea^islature.^ 

'La7vs  of  Alissouri,  /8sS-Q,  p.  67. 
^  It  should  be  noted  that  in  all  5  per  cent,  of  the  proceeds  from  the  sale  of  public 
lands  was  set  aside.     The  other  two-fifths,  or  2  per  cent.,  was  to  be  applied  under  the 


36  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

Two  days  after  the  establishment  of  the  Board  of  Internal 
Improvements,  a  further  act  was  passed  directing  the  attention 
of  the  board  to  specific  enterprises  for  the  coming  year  and 
appropriating  $20,000  for  its  expenses.'  The  board  was  directed 
to  survey  the  Osage,  North  Grand,  Salt,  and  Merrimac  rivers, 
beginning  at  the  mouth  of  each  and  ascending  to  certain  points  ; 
also  to  survey  the  route  so  often  proposed  for  a  railroad  from  St. 
Louis  to  the  Iron  Mountain.  The  board  was  to  report  to  the 
next  general  assembly  the  results  of  its  labor  and  to  make 
estimates  of  the  cost  of  improving  the  several  rivers  and  of  con- 
structing the  railroad. 

The  board  thus  constituted  in  February  1839,  organized  for 
work  in  the  city  of  St.  Louis  on  the  sixth  of  the  following  May. 
A  little  more  than  a  year  later  it  made  its  first  and  only  report 
to  the  general  assembly,  December  20,  1840.^  The  board  had 
surveyed  the  streams  and  the  line  of  railroad  as  had  been  ordered. 
In  the  report  it  is  stated  that  the  sum  needed  for  the  improve- 
ment of  the  Salt,  Osage,  and  Merrimac  rivers,  would  be  about 
four  million  dollars,  and  that  that  needed  for  the  railroad  to  the 
Iron  Mountain  would  be  about  $2,942,000.  Leaving  out  of 
account  the  fact  that  these  estimates  were  too  small,  a  very  com- 
mon mistake  of  those  times,  they  clearly  demonstrated  that  if  the 
people  of  Missouri  ever  achieved  anything  in  the  matter  of  canal 
and  railroad  construction,  they  would  have  to  make  provisions 
for  funds  on  a  much  larger  scale  than  they  had  ever  yet 
dreamed  of. 

direction  of  Congress  in  building  a  road  or  roads  to  the  state  of  Missouri  {U.  S. 
Statutes  at  Large,  vol.  iii.  p.  545).  This  2  per  cent,  was  applied  by  several  succeed- 
ing acts  of  Congress  to  the  extension  of  the  Cumberland  Road  westward  from 
Cumberland,  Maryland,  its  eastern  terminal.  This  road,  by  the  act  (March  29,  1806) 
establishing  it,  was  to  extend  only  to  the  Ohio  River.  Subsequent  acts  extended  it 
through  Indiana  and  Illinois.  The  only  act  referring  to  any  point  in  Missouri  as  an 
objective  point  for  this  road  is  that  of  March  2,  1831,  appropriating  a  small  amount 
($265.85)  for  arrearages  on  the  survey  of  the  road  from  Janesville  to  the  "Capital  of 
Missouri"  {U.  S.  Statutes  at  Large,  vol.  iv.  p.  469).  The  2  per  cent,  fund  of  Mis- 
souri was  usually  included  in  the  acts  making  appropriations  for  this  road  from  1820 
to  1838  (See  U.  S.  Statutes  at  Large,  vol.  ii.  p.  357). 

^Laws  of  Missouri,  1838-Q,  p.  75. 

'^  House  and  Senate  Journals,  1840-1,  Appendix,  pp.  458-506. 


EARLY    PERIOD  37 

§10.  However,  early  in  the  forties  no  state  in  the  Union 
was  very  aggressive  in  the  matter  of  going  into  debt  for  internal 
improvements;  the  lessons  of  1837  and  1839  were  yet  too  vividly 
impressed  upon  the  memory.  And  although  in  1841  (Septem- 
ber 4)  several  states  —  Alabama,  Indiana,  Illinois,  Ohio,  Missis- 
sippi, Missouri,  Louisiana,  Arkansas  and  Michigan  —  received 
each  a  grant  of  500,000  acres  of  land  to  be  applied  to  internal- 
improvements  under  the  direction  of  their  respective  legislatures,' 
such  was  the  depressed  condition  of  affairs  that  no  immediate 
use  was  made  of  the  funds  arising  from  the  sales  of  this  land. 

"It  has  been  seen  that  the  state  debts  as  a  whole  incurred  on 
account  of  internal  improvements  and  banking  up  to  1841 
amounted  to  231  million  dollars,  and  that  almost  in  every  case 
these  enterprises  resulted  disastrously.  This  wholesale  breaking 
down  of  the  schemes  of  so  many  states  would  therefore  naturally 
cause  all  states,  then  contemplating  the  construction  of  public 
works,  to  take  a  very  conservative  course,  if  not  to  abandon  the 
idea  altogether.  Moreover,  the  vicious  currency  system  which 
existed  for  some  years  prior  to  the  collapse  of  the  internal- 
improvement  enterprises  of  the  states  and  which  was  in  no  small 
measure  the  cause  of  it,  still  existed  as  the  nightmare  of  all  indus- 
trial undertakings.  This  system  was  peculiarly  detrimental  in 
the  western  states  simply  because  banking  was  more  inefficiently 
carried  on  in  the  West  than  in  the  East.  During  the  years  from 
1840  to  1844  the  disturbance  to  industry  in  the  West  was  due  to 
bad  currency,  to  overproduction  in  some  commodities,  and  in 
some  degree  to  the  tariff  of  1842.^  Missouri  at  this  time  was 
almost  wholly  agricultural,  and  the  depression  of  this  industry 
had  a  serious  effect  upon  all  others  within  the  state. 

§11.  Taking  into  account  the  economic  condition  of  the 
country   in  general,    the    outcome  of    the  internal-improvement 

'  United  States  Statutes  at  Large,  vol.  v.  p.  453. 

'  See  letters  in  answer  to  questions  sent  out  by  the  Secretary  of  the  Treasury  con- 
cerning the  causes  of  the  depressed  condition  of  the  country  ;  especially  with  regard  to 
the  tariff  act  of  1842  and  the  currency.  Report  of  the  Secretary  of  the  Treasury,  1845, 
pp.  489,  551,  554,  589,  and  592. 


38  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

experiment  of  the  other  states,  and  the  little  likelihood  of 
success  of  the  small  industrial  undertakings  of  Missouri,  as  evi- 
denced in  their  beginning,  there  is  no  occasion  for  surprise  at 
the  inactivity  of  this  state  in  1844  and  1845.  The  lessons  taught 
by  the  failures  of  other  states  are  reflected  in  the  inaugural 
address  of  Governor  Edwards  in  November  1844.  The  governor 
advised  that  "too  many  improvements  should  not  be  undertaken 
at  any  one  time,"  and  in  general  that  it  would  be  best  for  the 
state  to  pursue  a  "middle  course." 

However,  the  state  did  not  follow  even  a  middle  course. 
Uj:)on  a  proposition  to  establish  a  new  Board  of  Internal  Improve- 
ments to  continue  the  work  of  the  old,  which  had  now  served 
out  its  term,  the  Senate  committee  reported  unanimously  that 
"it  would  be  inexpedient  to  establish  a  Board  of  Internal 
Improvements  at  this  time.'"  This  committee  also  reported 
adversely  upon  several  matters  of  local  interest  before  it,  because 
it  was  "evident  that  the  Senate  would  not  make  any  appropri- 
ations of  the  grant  of  land  by  Congress  to  this  state  for  the  pur- 
poses of  internal  improvements  during  this  session  of  the  legis- 
lature." The  land  grant  of  500,000  acres  could  not  yield  an 
amount  large  enough  for  any  extensive  work  within  the  next  few 
years,  because  a  law,  recently  passed,  allowing  settlers  till  1847 
to  prove  their  pre-emption  titles,  would  retard  the  sales  of  land.' 
The  legislature  furthermore  passed  measures  which  relieved  the 
state  as  such,  for  the  time  being,  at  least,  from  all  fear  of  being 
committed  to  a  system  of  internal  improvements,  great  or  small. 
The  two  funds  possible  for  such  improvements,  the  "Road  and 
Canal  Fund,"  or  the  "Three  Per  Cent.  Fund,"  and  the  proceeds 
of  the  500,000  acre  land  grant  were  both  distributed  at  this  ses- 
sion among  the  counties  of  the  state,  to  be  used  by  them  in  the 
construction  of  roads.^  The  distribution  among  the  counties  was 
made  "share  and  share  alike,"  no  account  being  taken  of  the 
position  or  needs   of   one  county  as  compared  with   others,  or 

^  Senate  Journal,  1843,  p.  168.  '^  Ibid.,  Appendix,  p.  10. 

3  See  Senate  Journal,  /84s,  p.  347,  and  1847,  p.  26  ;  also  Revised  Statutes  of  Mis- 
souri, 1S43,  p.  956. 


EARLY    PERIOD  39 

the  possibility  of  developing  the   resources  of  the  state   in   gen- 
eral by  the  construction  of  a  few  main  highways. 

By  the  year  1847  the  people  of  Missouri,  having  been 
oppressed  by  the  crises  of  1837  ^"^  i839>  ^^^^  by  an  unsound 
currency  during  a  large  part  of  the  decade  from  1840  to  1850, 
having  practically  failed  in  their  banking  and  warehouse  under- 
takings, and  not  being  blessed  with  full  crops  during  much  of  this 
period,'  were  ready,  in  matters  of  internal  improvements,  to  go 
back  to  the  foot  of  the  ladder  and  start  anew.  Governor  Edwards 
says  in  his  message  of  this  year  to  the  legislature  that  "  the  best 
mode  of  facilitating  the  construction  of  public  works  —  macadam- 
ized roads,  railroads  and  canals  —  if  the  railroad  has  not  super- 
seded the  canal  —  and  the  permanent  improvement  of  our 
navigable  streams,  is  to  prepare  the  people  to  appreciate  the 
uses  and  advantages  of  such  works  ;  and  this  again  can  be  done 
in  no  other  mode  so  successfully  as  by  sending  the  schoolmaster 
into  every  village  and  hamlet  in  the  land,  and  by  giving  every 
proper  encouragement  to  the  education  of  the  great  mass."^ 

§12.  Notwithstanding  the  fact  that  the  timid  feeling  which 
pervaded  the  whole  state  regarding  the  projection  of  internal 
improvements  by  the  state  did  not  completely  pass  away  for 
some  four  years  yet,  the  people  wanted  railways  at  once.  The 
country  at  large  was  recovering  from  the  depression  which  fol- 
lowed the  panics  of  1837  ^"'^  ^^39-  Signs  of  returning  prosper- 
ity were  seen  on  every  hand.  In  many  parts  of  Missouri,  in  both 
city  and  country,  the  population  was  increasing  by  immigration 
very  fast;  and  the  people  of  the  state  were  "beginning  to  feel  a 
deep  and  lively  interest  on  the  subject  of  internal  improvements 
and  to  see  the  absolute  necessity  of  commencing  some  general 
system  of  public  works,  in  order  more  successfully  to  avail  them- 
selves of  the  natural  advantages  "  by  which  they  were  surrounded. 
They  wished  to  open  up  a  market  "for  the  surplus  products  of 
their  labor  and  industry     .      .     .     and   to  aid    in  the   develop- 

'  Governor's  Messages,  Senate  Journals,  1844  and  1S43. 
^  Senate  Jourjial ,  /S47,  p.  33. 


40  State  aid  to  railways  in  Missouri 

ment  of  the  inexhaustible  mines  of  iron,  coal,  lead,  copper,  and 
other  valuable  minerals,"  which  abounded  "in  various  parts  of 
the  state."'  Moreover,  at  this  time  the  vicious  system  of  cur- 
rency which  had  been  in  use  so  long  in  the  West  had  begun  to 
break  down  of  its  own  weight.  Until  recently  the  Bank  of  Mis- 
souri had  made  the  practice  of  receiving  and  lending  the  irre- 
deemable notes  of  banks  of  other  states ;  but,  about  this  time, 
there  had  begun  a  general  improvement  in  this  matter.  "All  the 
depreciated  and  worthless  paper  of  other  states"  had  ceased  to 
circulate  in  Missouri.^  Furthermore,  the  establishment  of  the 
Independent  Treasury  by  the  general  government  in  1845  ^^  a 
"specie-paying  and  specie-receiving  institution "3  did  much,  in 
this  time  of  general  misapprehension  of  the  true  nature  of  money, 
to  restore  business  upon  a  sound  basis  by  giving  to  it  the  one 
element  needed  —  certainty. 

The  general  trend  toward  better  times  being  evident  and  the 
desire  for  internal  improvements  being  so  strong,  the  attempt 
was  made  in  the  legislature  of  Missouri  in  1847  to  repeal  the 
laws  of  1845  distributing  the  "Three  Per  Cent.  Fund"  and  the 
proceeds  of  the  500,000  acre  land  grant  among  the  counties,  in 
order  that  these  funds  might  be  applied  under  the  direction  of 
the  legislature  to  state  enterprises.  The  attempt  proving  fruit- 
less, the  friends  of  internal  improvements  had  to  be  content 
with  seeing  a  few  private  railroad  companies  incorporated.  The 
friends  of  one  of  these  companies  now  memorialized  Congress 
for  land  grants  to  be  used  in  aiding  the  construction  of  the  pro- 
jected road,"  This  company  was  the  Hannibal  and  St.  Joseph, 
incorporated  February  16,  1847.^  The  main  features  of  its 
charter  will  be  noticed  later. ^  This  road  was  to  connect  St. 
Joseph  in  Buchanan  county  on  the  Missouri  River  with  Hanni- 
bal  in  Marion   county  near   the    Mississippi.      Both    towns  were 

'See  Memorial  to  Congress,  Laws  of  Missouri,  1847,  p.  353. 

^  Senate  Journal,  /84J,p.  i6. 

3  R.  J.  Walker  in  Cuntinenial  Monthly,  Februarj'  1863. 

■•See  Memorial  to  Congress,  La^vs  of  Missouri,  /S47,  p.  353. 

^  Laws  of  Missouri,  1847,  p.  156. 

^See  below,  chap.  iii.  pp.  3-7. 


EARLY    PERIOD  4  I 

increasing  "with  almost  incredible  rapidity,"  and  were  sur- 
rounded by  a  large  extent  of  fertile  country.  The  memorialists 
did  not  overstate  the  facts  in  regard  to  the  nature  of  the  soil  in 
the  section  of  the  state  through  which  this  road  would  pass  when 
they  represented  it  as  "equal  to  any  upland  in  the  West,  capable  of 
the  greatest  amount  of  production  of  almost  every  species  of 
agricultural  staples,  and  everyway  susceptible  of  the  highest 
state  of  cultivation." 

The  memorialists  asked  for  "alternate  sections  of  the  public 
and  unappropriated  lands  along  the  line  upon  which  it  might  be 
deemed  most  expedient  to  establish"  the  railroad.  It  was 
believed  by  the  memorialists  that  with  "the  aid  thus  added  to 
the  means  which  the  state  of  Missouri  could  apply  to  this  object 
and  which  those  interested  therein  would  cheerfully  invest  in 
such  work,"  the  railway  could  be  completed  within  a  few  years, 
and  that  it  would  greatly  promote  the  interests  of  the  state  and 
general  government.  It  was  also  argued  that  this  road  would 
give  "an  outlet  to  our  rich  and  valuable  trade  with  Sante  Fe 
and  other  Mexican  towns,  which  trade  [was]  becoming  daily 
more  and  more  important,  and  would  offer  many  facilities  to 
those  who  [were]  desirous  of  emigrating  to  Oregon  or  the  more 
distant  provinces  on  the  Pacific."^ 

During  the  four  years  which  elapsed  before  Congress  decided 
to  answer  this  appeal  for  land,  the  spirit  of  commercial  enter- 
prise exhibited  renewed  energy  in  Missouri.  Many  more  pri- 
vate railroad  companies  were  incorporated ;  and  additional 
memorials  were  sent  to  Congress  asking  for  land  to  be  used  in 
the  construction  of  railroads  and  also  in  the  improvement  of  the 
rivers  of  the  state. ^  Among  the  companies  incorporated  during 
this  time  was  the  Pacific  Railroad  Company.3  This  company 
was  to  construct  a  road  from  St.  Louis  to  the  city  of  Jefferson 
and  thence  to  some  point  on  the  western  boundary  of  the  state 
in  Van  Buren   county."     The  whole  of  this  line  would  therefore 

^See  Memorial  to  Congress,  Laws  of  Missouri,  1S47,  p.  354. 

^ Laws  of  Missouri,  i84q,  pp.  655-664. 

J  March  12,  1849. — Ibid.,  p.  219.  -tNow  Cass  county. 


42  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

lie  south  of  the  Missouri  River  and  would  be  for  a  great  part  of 
its  length  parallel  to  it.  As  yet,  however,  Congress  had  not 
answered  the  many  petitions  of  Missouri  asking  for  land  to  be 
used  in  assisting  railroad  construction.  Moreover  the  people  of 
the  state  were  as  yet  very  conservative  in  the  matter  of  commit- 
ting the  state  to  the  prosecution  of  a  general  system  of  internal 
improvement.  In  1848  upon  assuming  the  duties  of  his  office, 
Governor  King  stated  that  the  experience  of  our  sister  states 
demonstrates  that  "sound  policy  dictates  the  rejection  of  any 
scheme  to  burthen  the  state  with  a  heavy  debt  or  impair  its 
credit."'  The  conservatism  of  the  state  is  also  shown  at  this 
time  in  the  feeling  generally  expressed,  to  assist  in  the  construc- 
tion of  only  a  limited  number  of  railways.  And  although  at 
times  the  desire  to  improve  the  navigation  of  the  state  would 
have  extended  the  activity  of  the  state  and  also  that  of  Con- 
gress to  the  improvement  of  a  great  number  of  rivers  of  the 
state,  the  general  tendency  was  to  urge  the  improvement  of  only 
a  few  of  the  more  important  streams. - 

§13.  About  1 850  there  was  made  what  may  be  called  a  second 
general  attempt,  though  less  marked  than  that  of  1837,  to  secure 
the  advantages  of  internal  improvement  through  the  direct 
activity  of  the  states.  This  attempt,  however,  was  confined 
almost  wholly  to  the  southern  states.  It  was  at  this  time  that 
Missouri  began  her  notable  experiment.  Situated  as  the  state 
is,  almost  in  the  geographical  center  of  the  Union,  it  was 
natural  that  her  people  should  have  been  eager  to  divert  a  por- 
tion of  the  future  transcontinental  trade  of  the  country  to  a 
route  lying  through  her  borders.  The  gold  discoveries  in  Cali- 
fornia at  this  time  gave  greater  strength  to  the  desire ;  and 
indeed  during  the  whole  period  in  which  the  state  was  interested  in 
aiding  the  construction  of  railroads  this  idea  exerted  a  great 
influence.  As  time  went  on,  however,  the  chief  interest  was 
transferred  through  necessity  from  these  external  considerations 

^  Senate  Jour7ial,  /S4Q,  p.  43. 

'Memorials  to  Congress,  Laws  of  Missouri,  184S  and  /S4q. 


EARLY    PERIOD  43 

to    the    more    immediate    matter    of     developing    the     internal 
resources  of  the  state  itself. 

The  people  of  St.  Louis,  at  this  time  the  chief  commercial 
center  in  the  Mississippi  valley,  favored  more  and  more  the 
introduction  of  railroads  as  time  demonstrated  that  her  water- 
ways were  inadequate  for  her  needs.  From  time  to  time  the 
city  rendered  much  material  assistance  to  several  roads ;  and 
counties  and  municipalities  generally  took  immediate  advantage 
of  the  privilege  given  them  by  the  state  to  subscribe  bonds,  or 
to  give  aid  in  other  ways,  to  projected  railroad  enterprises. 

§14.  Taking  into  consideration  the  reasons  for  aiding  the 
railways  and  the  manner  of  aiding  them,  the  length  of  time  the 
state  was  engaged  in  the  enterprise,  and  the  extent  to  which  the 
state  became  involved  through  the  default  of  most  of  the  roads 
and  their  subsequent  sale,  the  experiment  in  Missouri,  as  com- 
pared with  those  in  some  of  the  older  states,  is  a  rather  unique 
and  complete  one.  An  account  of  this  experiment  constitutes 
the  most  interesting  chapter  in  the  economic  history  of  the 
state. 


CHAPTER  II. 

THE    BEGINNING    OF    THE    POLICY    OF    AIDING    THE 

RAILWAYS. 

ii^i.  It  will  have  been  observed  that  in  the  period  of  the 
greatest  activity  of  the  states  in  internal-improvement  matters, 
extending  from  about  1820  to  1840,  the  New  England  states  did 
not  in  their  corporate  capacity  enter  into  banking  and  railway 
enterprises,  and  that  they  did  not  assist  very  much  in  the  develop- 
ment of  such  enterprises.  These  were  states,  however,  in  which 
private  enterprise  was  awake  to  the  needs  of  the  times  and 
where,  for  that  reason,  private  capital  was  amply  supplied  for 
banking  and  internal-improvement  undertakings.  It  was  stated 
by  a  writer  in  1847  that  "the  New  England  states,  where  the 
greatest  proportion  of  bank  capital  and  of  public  works  exist,  are 
precisely  those  where  the  governments  have  done  nothing  for 
the  promotion  of  those  objects."'  The  only  attempt  among 
these  states  deserving  of  mention  was  that  of  Massachusetts  ; 
and  this  state,  as  soon  as  she  observed  that  private  individuals 
were  putting  capital  into  railroads  in  the  state  at  the  rate  of  four 
dollars  to  her  one  dollar,  declined  to  make  further  investments 
in  such  enterprises.  The  fact  that  there  existed  a  sufificient 
amount  of  private  enterprise  in  the  state  of  Massachusetts  to 
make  possible  such  activity  in  the  construction  of  railroads  as 
then  took  place,  gives  the  key  to  the  general  fact  that  the  New 
England  states  did  not  as  such  go  into  the  matter  of  railway 
construction.  The  annexed  table  shows  clearly  that  those  states 
which  left  such  work  to  private  enterprise  had,  according  to  the 
number  of  inhabitants  and  the  amount  of  taxable  wealth  of 
each,  quite  as  ample  railway  accommodation  in  1850  as  the 
states  which  aided  the  railways  and  were  not  in  debt  for  them  : 

'  Hunt's  Merchants''  Magazine,  xvii.  p.  578. 

44 


BEGINNING    OF    THE    POLICY    OF    AIDING    RAILWAYS 


45 


States  not  aiding 


Maine   

Vermont 

New  Hampshire 
Massachusetts... 
Connecticut .... 
Rhode  Island  .  . 
New  Jersey  .... 

Delaware 

Florida 

Alabama 

Mississippi  .... 

Louisiana 

Wisconsin 

States  Aiding, 
(l)  Primary. 

New  York 

Pennsylvania   .  . 

Maryland 

Ohio 

Indiana 

Illinois 

Michigan 

(2)  Secondary. 

Virginia    

North  Carolina. 
South  Carolina. 

Georgia 

Tennessee 

Kentucky 


Wealth  in  1850  a 


5122,777,000 

92,205,000 

103,652,000 

573,342,000 

155,707,000 

80,508,000 

200,000,000 

21,062,000 

22,862,000 

228,204,000 

228,951,000 

233.998,000 

42,056,000 


1,080,309,000 
722,486,000 
219,217,000 
504,726,000 
202,650,000 
156,265,000 
59,787,000 


430,701,000 
226,800,000 
288,257,000 
335.425.000 
201,246,000 
301,628,000 


3 
P. 
O 


583,169 
314,120 
317,976 
994.514 
370,792 
147.545 
489.555 
91.532 

87.445 
771,623 
606,526 
517,762 
305.391 


3.097,394 
2,311,786 

583.034 
1,980,329 
988,416 
851,470 
397,654 


1,421,661 
869,039 
668,507 
906,185 

1,002,717 
982,405 


236 

2,290 

39,310 

342,844 

309,878 

244,809 


90,368 


472,528 
288,548 
384,984 
381,684 

239.459 
210,981 


c 

c  • 

C  XJ" 

>.^ 

>.2 

^y  -^ 

n  to 

CJ  1)  OJ 

&  C 

?  % 

^8- 

f-i      H 

°§ 

■3  =  1 

^s-s 

'A  "i^  0 

—  28m 

^  OJ 

■^  3  C 

.^  U   *  irj 

<s  a 

^  0  ° 

^  a.  M  00 

0 

<J   *- 

0««-  H 

258 

121 

2.11 

369 

168 

4- 

462 

58 

4-47 

1,142 

.... 

2. 

551 

65 

3-55 

50 

30 

.625 

304 

40 

1.52 

16 

II 

.76 

54 

2.36 

244 

55 

1.07 

80 

30 

.35 

89 

.... 

.37 

20 

136 

•47 

1,649 

1,098 

1.60 

1,087 

538 

1.50 

335 

172 

1-53 

690 

1,341 

1-36 

256 

851 

1.26 

149 

1. 126 

•95 

411 

33 

.68 

483 

328 

1. 12 

249 

162 

1.09 

291 

135 

1. 01 

784 

200 

482 

2-34 

77 

380 

•25 

•53 
•47 
•57 
•34 
•25 
•  17 
[.03 


.28 

•43 
.86 

•07 


<j  United  States  Census,  1870,  Industry  and  Wealth,  p.  10.  b  Ibid.,  1850,  p.  ix. 
f  Hunt's  Merchants'  Magazine,  xxv.,  July,  1 851,  p.  121. 

The  writer  does  not  indeed  intend  to  assert  tliat  all  states  in 
which  private  capital  was  relatively  large  per  capita  refrained 
from  entering  in  their  corporate  capacity  into  railway  and  canal 
construction.  New  York,  Pennsylvania  and  Maryland,  in  1837, 
possessed  quite  as  much  wealth  per  capita  as  did  any  of  the 
New  England  states.  But  in  these  states  private  enterprise  did 
not  keep  pace  with  public  expectation.  The  reason  for  this  was 
doubtless  that  there  did  not  exist  a  sufficient  amount   of  private 


46  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

capital  for  the  prosecution  of  the  great  systems  of  internal 
improvements  obviously  demanded  by  the  undeveloped  resources 
of  the  states  and  surrounding  country. 

In  1850  the  contrast  between  the  northern  and  the  southern 
states  in  the  matter  of  constructing  railroads  is  quite  similar  to 
that  between  the  New  England  and  the  western  states  during 
the  early  period.'  The  fact  that  in  many  of  the  northern  states 
constitutional  amendments  had  been  passed^  to  prevent  the  states 
as  such  from  constructing  public  works  cannot  be  regarded  as 
the  main  reason  why  these  states  did  not  again  attempt  such 
enterprises  when  the  general  business  of  the  country  began  to 
revive  about  1850.  Had  there  existed  between  any  two  single 
states  or  group  of  states  in  the  West  in  1850,  such  a  commer- 
cial rivalry  as  existed  between  New  York  and  Pennsylvania  in 
1826,  it  is  safe  to  assert  that  constitutional  barriers  would  have 
been  removed.  Since  1840,  notwithstanding  the  many  blunders 
of  previous  years  and  their  resulting  burdens,  the  western  states, 
both  north  and  south,  had  grown  greatly  in  wealth ;  and  of 
these  the  northern  had  grown  much  faster  than  the  southern. 
The  chief  reasons  for  this,  as  is  commonly  conceded,  were  the 
greater  industry  of  the  northern  people,  and  the  greater  attrac- 
tions which  a  free  soil  offered  to  immigrants  from  the  Old 
World.  Many  of  the  southern  states,  feeling  that  they  would 
be  more  or  less  distanced  by  their  northern  neighbors  in  com- 
mercial development,  if  they  depended  wholly  upon  private 
enterprise,  resolved  to  resort  to  a  use  of  their  credit  to  secure 
funds  for  the  construction  of  railways.  Of  those  states  which 
had  already  failed  in  the  early  period,  some  now  determined  to 
try  it  anew  to  a  greater  or  less  extent ;  these  were  Virginia, 
Georgia,  South  Carolina  and  Tennessee.  Other  states  which 
adopted  the  policy  of  aiding  railways  at  this  time  were  Dela- 
ware, North  Carolina,  Louisiana  and  Missouri ;  in  each  case, 
however,  the  state    went    no    farther  than   lending   aid. 3     South 

'  See  De  Bow'i  Review,  xx.  p.  386.  -  Adams,  Public  Debts,  p.  341. 

3  See  De  Bow's  Review,  ix.  p.  224  ;  xx.  pp.  386-9  ;  xxi.  p.  401   et  seq. ;  also  Hunt's 
Merchants'  Magazine,  xxv.  p.  ill. 


BEGINNING    OF    THE    POLICY    OF    AIDING    RAILWAYS  47 

Carolina  and  Delaware  granted  only  a  small  amount  of  aid  and 
developed  no  systematic  plans.  The  remaining  states  began 
more  pretentious  systems.'  Of  these  systems,  that  of  Missouri 
soon  assumed  the  greatest  proportions. 

Up  to  the  time  of  the  first  grant  of  aid  by  the  state  for  the 
purpose  of  assisting  in  the  construction  of  railways,  the  people 
of  Missouri  had  been  sending  memorials  to  Congress  for  several 
years  asking  for  grants  of  land  to  be  used  in  constructing  rail- 
ways and  in  the  improvement  of  the  navigable  streams  of  the 
state.  The  great  desire  to  improve  the  roads  and  navigable 
rivers  is  reflected  in  almost  every  message  from  the  governor  to 
the  general  assembly  during  the  whole  of  the  period  from  1838 
to  1851. 

^  2.  In  1847  the  people  of  Missouri  began  "to  see  the  abso- 
lute necessity  of  commencing  some  general  system  of  public 
works  in  order  more  successfully  to  avail  themselves  of  the  natural 
advantages  by  which  they  were  surrounded."  They  wished  to 
open  "a  way  to  market  for  the  surplus  products  of  their  labor 
and  industry"  .  .  .  and  to  aid  "in  the  development  of  the 
inexhaustible  mines  of  iron,  coal,  lead,  copper  and  other  min- 
erals," which  abounded  "in  various  parts  of  the  state,"  and  which 
needed  "only  to  be  explored  and  fully  opened  to  make  them 
add  incalculably  to  the  wealth  of  Missouri  and  of  the  Union."  ^ 
Just  as  the  other  states  had  set  forth  the  value  of  their  natural 
resources  in  1837,  the  people  of  Missouri  in  1849  declared  that 
"no  state  in  the  American  Confederacy"  could  boast  of  mightier 
natural  resources  than  could  Missouri.  ^ 

It  is  very  true  that  the  resources  of  the  state  had  begun  to 
attract  a  great  deal  of  attention,  and  people  were  migrating  in 
great  numbers  to  the  state  ;  but  the  greater  part  of  those  who 
came  at  this  time  were  attracted  by  the  possibilities  of  a  virgin 
soil  rather  than  by  the  "mountains  of  iron"  and  "vast  beds  of 
copper,  lead,  cobalt  and   coal."     The  population   of  the  north- 

'  See  chap.  vi. 

=  Memorial  to  Congress,  etc.,  La7vs  of  Missouri,  1847,  p.  353. 

3  Governor's  Message,  Senate  Journal,  iS4g,  p.  42. 


48  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

crn  or  agricultural  part  of  the  state  was  increasing  at  this  time 
much  faster  than  that  of  the  southern  or  mineral  portion.  In 
1 8 50  almost  the  whole  of  the  population  of  Missouri  was 
engaged  in  agriculture  ;  and  the  shipments  of  agricultural  prod- 
ucts to  St,  Louis  during  the  years  preceding  1850  show  "that 
this  industry  was  growing  rapidly."'  The  mineral  resources  of 
the  state  were  not  being  developed  so  rapidly,  although  there 
were  signs  of  increasing  activity.  This  industry,  however, 
was  now  beginning  slowly  to  develop ;  nine  foundries  had 
already  been  established  in  St.  Louis.  In  1852  there  were  cold- 
blast  furnaces  at  the  Iron  Mountain,  running  from  "three  hun- 
dred to  three  hundred  and  twenty  days  in  a  year,  averaging 
about  five  and  one-half  tons  per  day  to  the  furnace."  The 
product  of  1851  amounted  to  3431  tons.  At  Pilot  Knob  there 
was  at  this  time  one  company  which  had  one  forge  "of  seven 
fires  for  making  wrought  iron  ;"  the  annual  product  of  this  forge 
was  10,000  tons.^ 

Concerning  the  copper  and  lead  industries  of  this  part  of  the 
state,  which  indeed  constituted  about  the  whole  of  such  indus- 
tries in  Missouri,  the  following  statement  is  given  by  a  shipper 
interested  in  the  matter  at  the  time:  "The  greatest  resources 
of  this  section  of  the  country  are  its  minerals  which  are  found  in 
great  abundance;  copper,  lead,  iron,  salt,  zinc,  and  several  other 
minerals  unknown.  I  received  ten  thousand  pounds  of  red  cop- 
per which  I  sold  in  New  York  and  have  been  informed  that  it 
was  of  an  excellent  quality.  The  copper  ore  is  abundant  and 
yields  a  good  per  cent.  Lead  ore  is  found  from  five  to  eight 
miles  back  of  this  place  (St.  Genevieve)  and  our  lead  mines  are 
pronounced  by  English  and  German  miners,  richer,  easier 
worked,  and  at  less  expense  than  the  famed  mines  of  Galena.  I 
ship  annually  from  this  place  three  million  pounds  of  lead."^ 

The  chief  center,  however,  to  be  developed  by  the  railroads 
soon  to  be  commenced,  was  the  city  of  St.  Louis,  at  this  time  a 

'  See  p.  51  below. 

*  Western  Journal  and  Civilian,  viii.  (May  1852),  p.  136  et  seq. 

3  Hunt's  Merchants'  Magazine,  xxvi.  (March  1852),  p.  308. 


BEGINNING    OF    THE    POLICY    OF    AIDING    RAILWAYS  49 

place  of  80,081  inhabitants/  In  1850  St.  Louis  was  by  far  the 
largest  manufacturing  center  in  the  Mississippi  Valley;  the  capital 
invested  in  manufactures  was  $4,377,711,  giving  employment  to 
7321  men  and  1130  women.  The  total  value  of  the  annual 
product  turned  out  by  the  various  industries  was  ;Si  5,400,340. 
Of  the  one  hundred  different  branches  of  business,  twenty-five 
turned  out  an  annual  product  valued  at  $200, 000  each  ;  three 
turned  out  an  annual  product  valued  at  more  than  one  million 
dollars  ;  and  one  a  product  valued  at  more  than  two  million 
dollars.^ 

Although  St.  Louis  was  at  this  time  the  greatest  manufactur- 
ing center  in  the  Mississippi  Valley,  its  real  importance  as  a  bus- 
iness center,  and  especially  as  a  distributing  point  for  the  com- 
merce of  the  Mississippi  Valley  and  the  country  in  general,  can 
be  properly  estimated  only  by  a  comparison  with  other  similar 
centers.  Such  a  center  was  Chicago  now  springing  into  exist- 
ence a  few  hundred  miles  distant  on  the  western  shore  of  Lake 
Michigan.  This  trading  post  had  grown  from  4470  inhabitants 
in  1840  to  30,000  inhabitants  in  1850.  Although  this  town  did 
not  possess  great  wealth  such  as  St.  Louis  possessed,  yet  it  had 
been  making  rapid  strides  in  both  wealth  and  population  during 
the  years  preceding  1850.  The  table  annexed  below  exhibits 
the  relative  strength  in  1850  of  the  two  centers  in  the  principal 
manufacturing  enterprises.  It  will  be  seen  that  the  two  places 
had  about  the  same  amount  of  capital  invested  in  the  principal 
industries.  But  in  the  aggregate,  because  of  the  great  number 
of  small  industries  in  St.  Louis,  Chicago  had  only  about  one- 
fourth  as  much  capital  invested  in  manufactures  of  various  kinds 
as  had  St.  Louis. 

It  was,  however,  mainly  as  a  distributing  center  that  the  city 
of  St.  Louis  was  now  demanding  so  much  attention  from  the 
people  of  Missouri ;  and  this  may  well  have  been  because  their 
proud  city  could  not  compare  so  favorably  with  the  trading  post 

'  United  States  Census,  1850. 

-  Hunt's  Merchants'  Magazine,  xxvi.  p.  314  et  seq.  For  facts  concerning  the  manu- 
factures of  the  city,  see  p.  50  below. 


50 


STATE    AID    TO    RAILWAYS    IN    MISSOURI 


Industries ' 


Foundries  and 
machine  shops. 

Manufacturers  of 
agricultural  im- 
plements   

Wagon  makers. 

Cabinet  makers. 

Flouring  mills.  . 

Tanneries 

Planing  mills..  . 

Carriage  makers 

Brass  foundries. 

Brass  and  Bell 
foundries 

Lard  oil  factories 

Factories  of  lard 
oil,  candles,  etc. 

Coopers 

Tobacco  and 
cigars 

Brickyards 


32 
50 
19 
9 
2 
8 
2 


10 


53 

43 
44 


10 


10 

4 
5 
3 


3  c 


^^ 


§389,000 


22,275 

72,760 

439.500 

70,200 

47,000 
56,600 
17,000 


99,300 


32,485 

43,180 
89,000 


^1,378,330 


U 


u 


;jSi8o,5oo 


359,000 

72,000 
155,000 
181.000 

60,000 

30,500 


22,500 


125,000 
16,500 

47,000 
30,000 


$1,279,000 


c 

CO 

.— 

c 

TD 

•0 

^ 

>^ 

.2  ui 

0 

a.v 

0*  ^ 

V  i^ 

3 
■T3 

a  3 

c  c 

Si-o 

0,.- 

e  c 

B  0 

/>:■" 

^  a» 

O':^ 

0  <j 

^^ 

^6 

545 

291 

267 

121 

195 

176 

181 

40 

103 

159 

35 

55 

138 

82 

22 

38 

226 

80 

248 

56 

158 

56 

619 

215 

3 
O 


§595,000 


146,585 

182,800 

2,367,750 

248,000 

96,000 

130,000 

25,000 


498.950 


o 

01 


U 


§241,900 

390,250 

134,600 

240,000 

46,700 


43,000 


235,375 
288,822   33,500 


147,270 
301,470 


63,000 
70,000 


on  Lake  Michigan  in  the  matter  of  commerce,  as  in  the  matter 
of  manufacturing  industries.  The  annexed  table  will  show  that 
in  many  of  the  chief  items  of  commerce,  such  as  corn,  wool, 
lumber  and  hides,  Chicago  was  already  in  advance  of  St.  Louis. 
Moreover  the  total  number  of  "steam  boats,  barges,  keels,  and 
flat-boats,"  3047,  arriving  at  St.  Louis  in  185 1  carried  a  tonnage 
of  only  683,140,  while  the  2279  "steamers,  propellers,  schoon- 
ers, brigs  and  barks,"  entering  the  port  of  Chicago  in  the  same 
year,  carried  a  tonnage  of  958,600.^ 

Already  had  the  rivalry  begun  between  the  two  places  as 
markets  for  the  produce  of  the  territory  recently  opened  up  by 

'See  Hunt's  Merchants'  Magazine,  xxiv.  p.  314  et  seq.;  also,  ibid.,  xxvi.  p.  510. 
^  Ibid.,  xxvi.  pp.  320  and  436. 


BEGINNING    OF    THE    POLICY    OF    AIDING    RAILWAYS 

COMPARISON    OF     RECEIPTS    AT    ST.    LOUIS   AND   CHICAGO    IN     I85I. 


51 


Articles 


Wheat,  bu 

Flour,  bbls 

Corn,  bu 

Oats,  bu 

Barley  and  malt,  bu .  . 
Pork,  cks.  and  tcs.  . . . 

"      boxes  and  bbls  . 

"      bulk,  pes 

"      bulk,  tons 

Salt,  sacks 

"     bbls  

"     lbs 

Hemp,  bales 

Lead,  pigs 

Tobacco,  hhds 

Beef,  tcs  and  cks 

"     bbls 

Hides 

Whisky,  bbls 

Sugar,  hhds 

"        bbls.  and  boxes 

lbs 

Coffee,  sacks 

Molasses,  bbls 

hhds 

Lard,  bbls 

"      tcs 

"      kegs 

Lumber,  ft 

Wool,  bales 


At  St.  Louis 

At  Chicago 

1,700,708 

388,077 

793,892 

51,650 

1,840.909 

2,647,465 

794,421 

334,148 

101,674 

(Barley)  ^6,iii 

15,298 

(lbs.) 

2,390,248 

103,013 

(bbls.) 

8,241 

768,8x0 

147 
216,933 

(bags) 

78,414 

46,250 

115,522 
1,170,700 

65,366 

(lbs.) 

1,033,648 

503,571 

(lbs.) 

1,402.135 

10,371 

abs.) 

1,558,686 

5,640 
8,872 

1.571 

90,736 

848,876 

47,991 

5,189 

29,276 

2.563 

36,687 

2,884 
3,765,836 

101,904 

(bags) 

13,111 

40,231 

2,663 
450 

14,465 

(lbs.) 

2,069,625 

37,743 

14,450 

38,820,016 

125,523,122 

1,128 

(lbs.) 

1,088,553 

the  Illinois  and  Michigan  Canal.  This  canal  completed  direct 
communication  between  St.  Louis  and  Chicago  making  each 
place  a  market  for  the  produce  of  territory  hitherto  naturally 
tributary  to  the  other.  During  the  year  (1848)  in  which  it  was 
opened  for  business,  964,134  bushels  of  wheat  were  shipped  from 
the  Illinois  River  to  St.  Louis,  while  in  1849  about  500,000  bush- 
els came  through  from  the  Illinois  River  to  Chicago.  "These 
facts,"  said  an  interested  writer  of  the  times,  "show  that  the 
grain  trade  of  that  river  will  come  to  Chicago  or  go  to  St.  Louis 
as  prices  may  rule  relatively  high  at  the  North  or  South;  and 
since  a  single  penny  per  bushel  may  be  sufficient,  when  there  is 
nearly  an   equipoise   between    the  two,  to  turn  the   scale   either 

'  See  Hunt's  Merchants'  Magazine,  xxvi.  pp.  325,  434,  and  439. 


52  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

way,  the  whole  subject  commends  itself  forcibly  to  those  who 
have  the  power  of  regulating  the  tolls  "  upon  this  canal.'  In 
1851  the  number  of  steamboats  arriving  at  St.  Louis  from  the 
Illinois  River  was  second  only  to  that  of  the  arrivals  from  the 
Upper  Mississippi."  The  opening  of  this  canal  almost  doubled 
the  lumber  trade  of  Chicago  within  one  year,  and  the  territory 
reached  by  the  canal  soon  became  the  greatest  lumber  market 
Chicago  had. 3 

Such  being  the  facts  of  trade  in  1 850-1,  both  St.  Louis  and 
Chicago  were  making  strenuous  efforts  to  secure  better  railway 
facilities;  but  in  this  matter,  Chicago  was  far  in  advance.  The 
Galena  and  Chicago  Railroad  was  completed  80  miles  west  from 
Chicago  in  185 1.  The  company  had  recently  declared  an  annual 
dividend  of  1 5  per  cent,  and  was  fast  pushing  its  work  of 
construction.  The  Rock  Island  and  Chicago  Railroad  extended 
six  miles  from  Chicago,  connecting  with  the  Michigan  Southern. 
The  Central  Railroad  Company,  which  was  soon  to  begin  a 
branch  running  from  its  main  line  in  Clinton  county  to  Chicago, 
had  already  made  great  progress  and  had  just  recently  disposed 
of  four  million  dollars  worth  of  bonds.  It  was  expected  that  the 
Southern  Michigan  and  the  Michigan  Central  would  soon  reach 
the  city;  and  by  means  of  these  the  whole  northeastern  seaboard 
would  "be  brought  into  railroad  communications  with  Chicago." 
The  Northwestern  had  completed  fifteen  miles  of  the  main  line 
and  two  branches  ;  this  was  "the  best  paying  road  connected 
with  Chicago,  its  net  income  ranging  from  30  to  40  per 
cent,  on  the  original  cost."  The  Western  Railroad  connected 
with  the  first  branch  of  the  Northwestern  at  O'Plain  River,  and 
was    completed   to    Salt   Creek,   a    distance  of    six    miles.     The 


'  Hunt's  Mercha7its' 

Magazine,  xxvi.  p.  434  et 

seq. 

'^From  New  Orleans 

300 

the  Ohio 

457 

"    Illinois  River 

634 

"   Upper  Mississippi 

-    639 

"   Missouri 

301 

Cairo  and  other  points 

294 

lunt's  Merchants'  Magazitie  xxvi.  p.  319. 

3  Ibid.,  p.  434. 

BEGINNING    OF    THE    POLICY    OF    AIDING    RAILWAYS  53 

Southern  Road  was  completed  south  of  the  city  ten  miles,  and  a 
"cash  dividend  of  14  per  cent,  had  been  declared  by  the 
company  for  185 1."  Other  roads  in  the  vicinity  of  Chicago 
were  being  constructed  which  would  become  cross  lines  between 
the  main  lines.  Others,  projected  in  Canada,  connected  with 
the  ports  on  the  Great  Lakes  with  which  lines  of  steamers  from 
Chicago  already  made  connection. ' 

The  city  of  St.  Louis,  notwithstanding  the  fact  that  her  com- 
mercial supremacy  might  already  be  questioned,  remained  as  yet 
very  complacent  in  matters  of  commercial  rivalry.  "  Her  natural 
position"  was  her  great  heritage.  "  Knowing  her  wealth  as  well 
as  the  activity  and  proverbial  industry  of  her  citizens,"  St.  Louis 
viewed  "  with  no  jealous  eye  the  efforts  made  in  the  state  of 
Illinois  and  elsewhere  to  carry  out  railroad  enterprises  such  as 
the  Central  Railroad  from  Chicago  and  Dubuque  to  Cairo  and 
the  various  cross  lines  that  were  being  extended  from  the  Lake 
to  the  Mississippi."  These  latter  roads,  profitable  as  they  might 
be  to  parties  interested,  would,  it  was  thought,  ''niahdy  benefit 
St.  Louis  by  converting  the  thinly  inhabited  country"  through 
which  they  were  to  pass  into  "populous  and  flourishing  districts 
connected  with  St.  Louis  by  intersecting  roads. "^ 

Nevertheless,  the  opening  of  the  Alton  and  Springfield  Rail- 
road in  185  I,  as  it  resulted  in  the  necessity  of  running  an  extra 
packet  between  Alton  and  St.  Louis,  deeply  impressed  the  citi- 
zens of  the  latter  city  with  the  necessity  of  an  extensive  system 
of  railway  communication. 3  But  this  work  of  railway  construction 
was  not  begun  till  July  4,  1851.  And  at  the  close  of  that  year 
the  city  had  only  nine  miles  of  road  on  one  line  to  rival  the  many 
lines  already  completed  for  several  miles  out  of  Chicago. 

The  desire  to  develop  the  internal  resources  of  the  state  and 
to  open  up  tributary  territory  for  the  already  thriving  metropolis 
of  St.  Louis  were  indeed  two  of  the  principal  causes  which  led 
the  state  to  adopt  the  policy  of  assisting  in  railway  construction  ; 
but  these  after  all  can  hardly  be  said  to   have    been  at   this  time 

'Hunt's  Merchants^  Magazine,  xxvi.  (April  1852),  p.  441  et  seq. 

' /i/ic/.  (yi arch   1851),  p.  309.  •  3/^/(/.,  xxviii.  p.  420. 


54  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

the  chief  causes.  During  the  years  preceding  and  following  1850, 
railroads  were  being  projected  from  the  Atlantic  seaboard  to  the 
lakes  and  to  the  Mississippi  River,  and  from  the  lakes  and  the 
Mississippi  westward  to  the  Pacific.  The  people  of  Missouri 
were  greatly  interested  in  the  lines  of  railway  coming  from  the 
East,  and  also  in  those  to  be  extended  to  the  West. 

In  1850  the  Atlantic  seaboard  states  had  a  continuous  line  of 
railway,  "commencing  at  Portland  in  the  State  of  Maine,  passing 
successively  through  Boston,  Providence,  New  York,  Philadel- 
phia, Baltimore,  Washington,  and  Richmond,  and  terminating  at 
Wilmington  (N.  C),  the  total  length  of  which  was  nearly  one 
thousand  miles."  From  Wilmington  the  communication  with 
Charleston  was  maintained  by  steamboats  plying  along  the  coast. 
Several  of  the  above  cities  were  already  centers  from  which 
great  railroad  systems  radiated.  Furthermore,  Charleston,  S.  C, 
and  Savannah,  Ga.,  were  points  from  which  other  great  lines  of 
railway  communication  issued  westward.  That  which  proceeded 
from  Charleston  extended  "across  South  Carolina  to  Augusta 
on  the  confines  of  Georgia,  throwing  off  a  branch  northward  to 
Columbia,  the  capital  of  the  state."  From  Augusta  the  line  of 
railway  was  "continued  westward  through  Georgia,  passing 
through  Madison  and  Decatur,  to  the  left  bank  of  the  Tennessee 
River,  throwing  off  a  branch  to  Athens."  From  Savannah  the 
line  of  railway  passed  through  the  state  of  Georgia  and  the  town 
of  Macon,  and  united  with  a  former  line  at  Decatur.  These  lines 
of  railway  communication  were  continued  westward  to  the  left 
bank  of  the  Alabama  River,  on  which  the  transportation  was 
continued  by  steamboats  to  Mobile  and  thence  to  New  Orleans  ; 
another  line  connected  the  above  roads  with  the  Tennessee  River, 
by  which  the  navigation  was  "continued  through  the  Mississippi 
Valley,  to  the  left  bank  of  its  great  tributary,  the  Ohio."'  Lines 
were  also  projected  in  1850  which  in  four  years  would  unite 
Memphis  with  Knoxville  ;  and  a  company  had  been  incorporated 
to  extend  this  road  to  the  Virginia  line.  Then  from  the  com- 
pletion of  the  Tennessee  and  Virginia  road   Baltimore  would  be 

•Lardner,  Railway  Economy  (1850),  p.  327  et  seq. 


This  map  is  taken  from  "Committee  Reports,  XXXI.  Congress,  ist  Session,  No.  140."  (Report  on 
Whitney's  Railroad  to  the  Pacific.)  Other  railways  on  the  map  besides  those  designated  projected  were  also 
only  projected  railways.  For  lack  of  reliable  information,  however,  it  is  impossible  to  designate  exactly  those 
that  had  lieen  actually  constructed  and  those  that  had  been  only  projected.  A  good  summary  of  the  roads 
actually  constructed  is  given  in  Lardner's  "Railway  Economy  in  Europe  and  America"  (1850),  pp.  327-331. 


BEGINNING    OF    THE    POLICY    OF    AIDING    RAILWAYS  55 

connected  with  Memphis.'  There  was  at  this  time  little  doubt 
that  the  Memphis  and  Charleston  Railroad,  organized  in  April 
1850,  would  be  put  under  contract  and  completed  in  some  two 
or  three  years. ^  Such  were  in  main  outline  the  railways  pro- 
jected in  the  eastern  portion  of  the  country  which  were  of  special 
interest  to  the  people  of  Missouri  and  particularly  to  the  inhab- 
itants of  St.  Louis. 

The  question  of  the  location  of  a  railroad  across  the  western 
portion  of  the  continent  received  at  this  time  far  more  general  and 
special  attention  in  the  Mississippi  Valley  than  that  relating  to  any 
road  or  system  of  roads  across  the  eastern  portion.  Although 
attention  was  directed  to  the  scheme  of  connecting  the  Pacific 
Coast  with  the  interior  of  the  United  States  before  the  acquisition 
.of  California  and  Texas, 3  after  the  acquisition  of  these  large  ter- 
ritories the  intensity  of  interest  in  such  a  great  enterprise  was 
greatly  increased,  as  is  shown  by  the  many  conventions  and  pub- 
lic meetings  held  regarding  this  matter  between  1846  and  1850, 
and  by  the  resolutions  of  many  state  legislatures  favoring  the 
carrying  out  of  some  plan.''  Three  different  routes  were  at  this 
time  generally  suggested.  The  first,  a  northerly  route,  suggested 
by  Mr.  Asa  Whitney,  of  New  York,  was  to  extend  from  Lake 
Michigan  through  Prairie  Du  Chien  and  South  Pass,  and  then 
northwest  to  connect  with  the  Columbia  River.  And  by  virtue 
of  a  memorial  to  Congress,  asking  public  lands  to  be  used  in 
constructing  a  road  along  such  a  route,  Mr.  Whitney  has  the 
honor  of  being  the  first  to  take  practical  steps  towards  securing 
a  line  of  railway  communication  from  the  interior  to  the  Pacific 
Coast.  Among  the  several  states  which  passed  resolutions 
endorsing  Mr.  Whitney's  plan  were  the  following  southern 
states  :   Georgia,  Tennessee,  Alabama,  Maryland,  and  Kentucky. 

■  De  Boiv's  Revie'w,  ix.  p.  224. 

^  Ibid.,  pp.  222  and  314. 

3  See  Mr.  Asa  Whitney's  first  memorial  to  Congress  "  relative  to  the  construction  of 
a  railroad  from  Lake  Michigan  to  the  Pacific  Ocean."  Ex.  Doc,  2d  session,  XXVIIL 
Congress,  No.  72. 

^  Reports  of  Committees,  1st  session,  XXXL  Congress,  No.  140,  pp.  21  to  93  ;  see  also 
map  opposite  taken  from  this  report. 


56  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

Each  of  these  states  mentioned  among  its  reasons  for  endorsing 
this  plan  that  such  a  road  because  of  its  great  commercial 
importance  to  all  parts  of  the  country  would  "  tend  to  consoli- 
date our  Union."' 

However,  about  the  time  of  the  cession  to  the  United  States 
of  the  great  California  territory,  the  southern  states  began  to 
express  a  desire  for  "a  more  southern  route."  Two  such  routes 
were  at  this  time  marked  out ;  one  was  to  extend  westward  from 
Memphis,  Tennessee,  and  one  from  St.  Louis,  Missouri.  It  was 
also  suggested  that  there  be  one  main  line  extending  west  from 
Fort  Independence,  Missouri,  following  the  Santa  Fe  trail  to 
Santa  Fe,  then  the  course  of  the  Gila  River  to  San  Diego  and 
along  the  coast  to  San  Francisco  ;  to  the  east  of  Fort  Independ- 
ence branches  could  be  extended  to  any  point. ^ 

Rivalry  of  course  sprang  up  between  southern  cities  as  to 
which  one  should  become  the  eastern  terminus  of  the  line  to  be 
projected.  In  the  fall  of  1849  two  great  conventions  were  held  ; 
one  in  St.  Louis,  and  one  in  Memphis,  concerning  the  route  to 
be  selected  for  the  proposed  road  from  the  Mississippi  lo  the 
Pacific  Ocean.  As  might  be  expected,  each  convention  repre- 
sented that  the  city  in  which  it  met  was  the  proper  point  from 
which  such  a  great  national  highway  should  be  projected  west- 
ward and  buttressed  up  its  claims  by  arguments  more  or  less 
specious.  As  has  been  stated  by  other  writers,  these  conven- 
tions represented  largely  local  interests.  However,  the  feeling 
in  the  South  which  gave  rise  to  the  desire  for  better  immediate 
communication  with  the  West,  although  not  exhibited  in  either 
of  these  conventions,  had  a  much  more  than  local  significance. 
A  southern  writer  of  this  period,  in  speaking  of  the  routes  in 
question,  says:  the  "South  has  generally  favored  Mr.  Whitney's 
scheme  and  several  state  legislatures  have  adopted  resolutions 
in  its  favor,  recommending  its  adoption,  but  since  the  acquisition 
of  California  and  the  increased  agitation  of  the  slavery  ques- 
tion, she  has  felt  a  strong  desire  to  have  the  road  located   as  far 

^  Ex.  Doc.  1st  session,  XXXI.  Congress,  No.  140,  pp.  55  to  61. 
'^  Committee  Reports,  2d  session,  XXX.  Congress,  No.  145,  p.  46. 


BEGINNING    OK    THE    POLICY    OF    AIDING    RAILWAYS  5/ 

south  as  possible."'  However,  both  the  St.  Louis  and  Mem- 
phis conventions,  so  far  as  the  language  of  their  memorials  is 
concerned,  were  conceived  in  a  broad  spirit  of  nationality.^ 

The  slavery  interests  of  the  South,  however,  were  considering 
the  matter  of  western  railway  connection  with  no  little  concern. 
The  above  writer  continuing,  discusses  the  influence  of  Mr. 
Whitney's  proposed  road  upon  the  South,  from  the  standpoint 
(i)  of  its  extension  for  its  full  length  upon  free  soil,  and  of  the 
belief  (2)  that  the  rapid  settlement  of  the  country  along  the  line 
would  "be  prejudicial  to  the  South  by  increasing  a  population 
hostile  to  her  institutions."  Of  course,  the  arguments  of  this 
writer  in  favor  of  this  road,  from  the  standpoint  just  men- 
tioned, and  that  too  upon  the  conditions ^  "of  a  continuance  of 
the  union  of  the  states"  and*  "  of  a  dissolution  of  the  states  and 
the  formation  of  a  southern  confederacy,"  is  here  of  only  passing 
interest.  What  Missouri  feared,  and  that  wholly  from  a  com- 
mercial standpoint,  was  that  unless  she  intervened  the  southern 
route  favorably  considered  would  pass  near  by  but  not   through 

^  De  JBoui's  Review,  ix.  p.  6oi. 

-"The  Memphis  convention,  acting  upon  the  broad  spirit  of  nationality  in  wliicli  it 
was  convened,  refrained  from  any  expression  of  opinion  as  to  the  topographical  mer- 
its of  the  different  routes  which  have  been  proposed  from  time  to  time.  The  feeling 
which  animated  the  convention  was  above  all  local  jealousies  and  sectional  prejudices. 
The  convention  was  for  the  road,  and  in  favor  of  that  terminus  and  route,  begin 
where  it  should  and  run  where  it  might,  that  would  best  subserve  the  great  ends  and 
objects  of  the  road." — Report  of  the  proceedings  of  the  convention,  Covwiiltee 
Reports,  1st  session,  XXXI.  Congress,  No.  140. 

The  St.  Louis  convention,  which  consisted  of  more  than  one  thousand  delegates 
from  twelve  states  of  the  Union,  and  which  received  letters  of  encouragement  from 
many  noted  men  of  opposite  political  beliefs,  could  have  been  none  other  than  a  con- 
vention assembled  in  the  interests  of  the  country  in  general.  The  representatives 
from  the  several  states  were  as  follows  :  Missouri,  543  ;  Pennsylvania,  18  ;  New  York, 
I  ;  Ohio,  8  ;  Indiana,  37  ;  Kentucky,  9  ;  Illinois,  379  ;  Wisconsin,  4  ;  Iowa,  69  ;  Mich- 
igan, I  ;  Louisiana,  I  ;  Tennessee,  7.  Letters  were  received  from  the  following 
named  gentlemen  regretting  they  could  not  be  present  and  encouraging  the  matter  in 
every  way  :  Levi  Woodbury,  Z.  Pratt,  Richard  M.  Johnson,  Lewis  Cass,  John  C.  Cal- 
houn, Henry  Clay,  Martin  Van  Buren,  William  H.  Seward,  Levi  Hubbell,  Thomas  H. 
Benton,  Jr.,  James  Gadson,  John  N.  Niles  and  others. — Proceedings  of  the  National 
Railroad  Convention  which  assembled  in  the  city  of  St.  Louis,  October  /j,  /84g. 

3  See  map,  p.  55. 

*  De  Bow''s  Reviezi',  ix.  p.  612. 


58  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

her  territory.  The  road  from  Mobile  to  Chicago'  already  men- 
tioned, was  to  be,  according  to  the  writer  just  quoted,  the  great 
artery  which  would  make  connection  with  the  main  trunk  line 
to  be  built  by  Mr.  Whitney,  and  which  would  give  the  South  all 
the  advantages  that  she  could  hope  for  from  any  southern  route. ^ 

Notwithstanding  the  fact  that  the  people  of  Missouri  at  this 
time  were  often  more  or  less  justly  charged  with  not  following 
out  in  the  best  way  their  economic  prospects,  the  state  did  not 
lack  individual  men  who  grasped  the  whole  situation  both  as 
concerned  the  local  needs  of  the  state,  and  as  concerned  the  cor- 
relation of  the  railroad  enterprises  of  Missouri  with  those  of 
national  importance  east  and  west.  In  an  address  to  the  Board 
of  Directors  of  the  Pacific  Railroad,  in  June  1850,  Mr.  Thomas 
Allen,  President  of  the  company,  stated  the  facts  of  the  com- 
mercial situation  of  the  city  of  St.  Louis  and  the  state  of  Mis- 
souri with  regard  both  to  local  and  general  interests  in  a  vivid 
way  and  sounded  the  note  which  in  a  short  time  roused  the  peo- 
ple of  the  state  to  action. 

As  a  matter  of  fact  the  people  of  Missouri  for  the  past  ten 
years  had  depended  altogether  too  much  upon  their  "natural" 
advantages  for  means  of  transportation.  Mr.  Allen  admitted 
that  nature  had  done  much  for  them.  But  he  added:  "It  is 
precisely  because  she  has  done  so  much  that  we  have  not  felt 
the  necessity  of  doing  anything  for  ourselves,  while  our  neigh- 
bors at  the  north  and  the  south  of  us  are  making  the  greatest 
exertions  to  triumph  over  nature,  and  to  obtain  by  art  these 
advantages  which  nature  has  denied  them.  At  the  same  time  it 
is  not  to  be  denied  that  our  relations  to  the  navigable  rivers  con- 
stitute our  chief  natural  advantages."  It  was  true  that  the 
interior  of  the  state  was  building  fast  but  not  so  fast  as  St.  Louis. 
This  was  the  case  because  it  was  not  alone  with  the  interior  of 
Missouri  that  St.  Louis  found  "a  profitable  traffic."  She  had 
reached  out  in  many  directions,  and  if  the  trade  of  the  Upper 
Mississippi  and  of  the  Illinois  had  been   diverted  from   her,  the 

'See  map,  chap.  ii.  p.  16. 

*  De  Bow's  Review,  chap.  ix.  p.  612. 


BEGINNING    OF    THE    POLICV    OF    AIDING    RAILWAYS  59 

consequences  would  have  been  felt  to  be  of  serious  weight.  The 
commerce  which  was  building  up  St.  Louis  was  mainly  "the 
produce  trade"  and  to  this  end,  Iowa,  Illinois,  and  even  Wiscon- 
sin contributed  largely.  In  the  year  1849,  the  number  of  steam- 
boat arrivals  from  the  Upper  Mississippi  were  806,  from  the 
Illinois  River  686,  while  from  the  Missouri  River  there  were  but 
355.  The  numerous  barges,  keels,  flat  and  canal  boats  which 
arrived  in  St.  Louis  came  chiefly  from  the  Upper  Mississippi  and 
the  Illinois.  The  building  of  railroads  would  increase  the 
diversity  of  the  trade  of  St.  Louis.  While  she  then  enjoyed  a 
large  carrying  trade  of  a  certain  character,  railroads  to  the  min- 
eral regions  would  result  in  the  springing  up  of  large  factories. 
Such  transportation  facilities  would  "make  St.  Louis  the  manu- 
factory and  machine  shop  as  well  as  the  emporium  and  metrop- 
olis of  the  Mississippi  Valley."  "At  the  north,"  Mr.  Allen 
continued,  the  inhabitants  were  applying  "superior  industry 
and  energy"  to  the  "great  productive  capabilities"  of  their 
country.  This  energy  was  leading  them  to  plan  for.  railroads. 
"We  see  railroads  projected  from  Chicago  to  Cairo,  from  Spring- 
field to  Quincy,  from  Springfield  to  Terre  Haute,  from  Peoria  to 
Oquawka,  from  Galena  to  Chicago,  from  Alton  to  Springfield 
(Illinois)  and  from  St.  Joseph  to  Hannibal,  in  our  own  state; 
all  of  them,  but  the  first  mentioned,  are  commended  to  the 
public  as  probable  links  in  the  great  chain  which  is  to  connect 
the  Atlantic  and  the  Pacific.  On  the  south  of  us  we  see  pro- 
jected and  chartered  the  Missouri  and  White  River  Railroad,  and 
the  Missouri  and  Mississippi  Railroad,  railroads  in  Tennessee, 
reaching  to  the  Mississippi,  while  our  countrymen  in  the  extreme 
south  aided  and  backed  by  the  topographical  corps  of  the 
United  States  are  urging  forward  a  railroad  by  the  Gila  route  to 
the  Pacific  at  San  Diego,  which  should  have  a  terminus  upon  the 
Mississippi  below  the  mouth  of  the  Ohio.  While  these  move- 
ments are  going  on  around  us,  St.  Louis  is  doing  nothing  but 
relying  confidently  upon  the  centrality  of  her  position,  her  large 
capital  and  advanced  growth,  and  her  produce  trade." 

The  nature  of  the  great  natural  highway  of  commerce  of  the 


60  .  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

state,  the  Missouri  River,  was  plainly  stated  by  Mr.  Allen. 
"There  it  lies,"  he  said,  "turbid,  dangerous,  uncertain,  full  of 
snags  and  sand  bars,  and  ever-changing  channels,  causing  high 
insurance,  costly  transportation,  and  subject  to  many  drawbacks 
and  disappointments."  However,  upon  this  highway,  such  as  it 
was,  commerce  had  "  trebled  in  three  years,"  and  was  then  "  requir- 
ing an  average  of  one  steamer  per  day  for  every  day  in  the  year."  ' 
Congress  was  not,  however,  at  this  time  favorable  to  the 
proposals  for  a  southern  route.  In  the  report  of  the  committee 
of  Congress  (March  13,  1850)  upon  the  plan  suggested  by  Mr. 
Whitney  and  those  suggested  by  the  conventions  of  St.  Louis 
and  Memphis,  the  whole  matter  of  decision  in  favor  of  one  or  of 
the  other  routes  turned  on  the  question  of  means,  which  was 
regarded  "as  the  sme  qua  non'  of  plans  for  such  great  enter- 
prises. The  committee  thought,  as  the  two  conventions  offered 
no  plans  for  means  other  than  those  of  the  national  Treasury, 
that  the  plan  offered  by  Mr.  Whitney  was  by  far  the  best.  On 
the  line  selected  by  Mr.  Whitney  there  were  public  lands  which 
as  suggested  by  him  could  be  used  for  the  purpose  of  construct- 
ing a  road.  On  the  lines  selected  by  the  southern  conventions, 
there  was  on  the  contrary  only  a  small  amount  of  public  lands. 
It  was  further  stated  by  the  committee  that  the  eastern  terminus 
of  Mr.  Whitney's  road  on  Lake  Michigan  would  be  "more  equal 
and  fair  for  all  parts  of  the  United  States  on  the  east  of  the  Mis- 
sissippi than  any  other  point  farther  south."  This  would  "appear 
by  the  measurement  of  distances  from  this  terminus  on  the 
routes  of  transportation  existing  and  surveyed  to  the  Atlantic 
ports;  north  and  south."  Mobile,  it  was  shown,  is  nearer  to  this 
terminus  "by  three  hundred  miles  than  New  York,  and  five  hun- 
dred miles  nearer  than  Boston."  Again,  Mr.  Whitney's  route, 
though  farther  north,  was  regarded  as  the  most  favorable  because 
the  mountain  passes  which  it  traversed  being  of  much  lower 
altitude  than  those  farther  south,  would  be  less  in  danger  of 
being  blocked  by  snow  during  the  winter  months.  ^ 

^  De  Bow's  Review,  VIII.  (June  1850),  p.  571. 

^  CommiUee  Reports,  1st  Session,  XXXI.  Congress,  No.  140,  p.  11. 


BEGINNING    OF    THE    POLICY    OF    AIDING    RAILWAYS  6l 

Notwithstanding  the  great  and  growing  favor  of  the  route 
selected  by  Mr.  Whitney,  Senator  Benton  of  Missouri,  one  of  the 
few  men  in  the  state  who  not  only  at  this  time  but  at  a  very  much 
earlier  date  had  fully  recognized  the  great  importance  of  looking 
to  the  future  in  the  matter  of  developing  western  facilities  of 
transportation  for  the  state,  had  already  (February  i8,  1849), 
before  the  formal  report  of  the  congressional  committees  in  favor 
of  the  northern  route,  introduced  a  bill  for  the  construction  of 
a  Central  Pacific  Railroad,  which  should  begin  at  St.  Louis,  ter- 
minate at  San  Francisco,  and  have  a  branch  to  the  Columbia 
River.  The  plan  presented  by  Senator  Benton  involved  national 
as  opposed  to  private  enterprise  in  the  construction  of  the  road. 
"The  road,"  he  says,  "which  I  propose  will  be  national  in  its 
character — in  all  its  features  and  parts;  national  because  no 
private  resources  are  equivalent  to  such  a  work  nor  fit  for  it.  I 
look  upon  it,  Mr.  President,  that  all  propositions  to  have  this 
road  made  as  a  private  road  by  individuals  or  companies  are 
utterly  condemned  by  the  magnitude  of  the  undertaking,  by  the 
question  of  Indian  title  and  possession,  and  by  the  impolicy  and 
illegality  of  sending  individuals  to  treat  with  the  Indian. 
I  go  against  all  schemes  of  individuals  or  of  companies  and 
especially  those  who  come  here  and  ask  of  the  Congress  of  the 
United  States  to  give  themselves  and  their  assigns  the  means  of 
making  a  road  and  taxing  the  people  for  the  use  of  it.  .  .  . 
The  American  people  are  themselves  to  furnish  the  investment 
and  then  these  individuals  are  to  levy  a  toll  equal  to  the  amount 
invested.      .      .      .      I  repudiate  the  whole  idea."' 

Senator  Benton's  bill,  although  reported  back  to  the  Senate 
without  amendment  by  the  committee  to  which  it  was  referred, 
was  never  passed.^  But  the  plan  which  it  set  forth  was  highly 
pleasing  to  the  people  of  Missouri.  The  general  assembly  of 
the  state  expressed  the  willingness  in  a  memorial  to  Congress 
regarding  the  proposed  road  "  to  pledge  all  proper  state  legisla- 
tion, whether  by  guaranteeing  a   right   of  way  or  otherwise,  to 

'  Cong.  Globe,  2d  Session,  XXX.  Congress,  p.  472. 
^  Senate  Journal,  2d  Session,  XXX.  Congress,  p.  283. 


r/"     ^     OF  THE 

OF 


62  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

protect  and  secure  the  progress  of  this  work "  through  the 
state.'  In  accordance  with  this  promise  and  on  the  same  day  of 
the  sending  of  the  memorial,  the  legislature  of  the  state  passed 
an  act  giving  the  right  of  way  through  the  state  to  the  United 
States  for  the  proposed  road." 

Although  for  the  time  no  bill  passed  Congress  favoring  the 
northern  route,  the  favor  shown  to  this  route  by  both  the  Houses 
of  Congress  in  the  report  already  mentioned  was  evidence  enough 
to  prove  to  the  people  of  Missouri  that  the  construction  of  a 
great  national  railway  by  the  general  government  according  to 
the  plan  of  Senator  Benton  must  not  be  depended  upon.  They 
therefore  very  naturally  concluded  that  they  must  upon  their 
own  account  make  an  effort  to  secure  railway  communication 
with  the  West  at  the  earliest  possible  date  if  they  would  keep  pace 
with  the  enterprise  of  other  states. 

In  his  message  to  the  general  assembly  of  Missouri,  Decem- 
ber 30,  1850,  Governor  King  says:  "Our  enterprising  country- 
men both  north  and  south  of  us  who  have  an  interest  in  different 
routes  are  most  laudably  engaged  in  pressing  forward  their  plans, 
which,  if  successful,  will  not  only  turn  into  different  channels  the 
countless  millions  of  wealth  the  roads  east  of  us  would  bring 
into  the  state,  but  we  shall  be  deprived,  moreover,  of  being  the 
receptacle  of  that  golden  stream  of  commerce  which  is  at  no  distant 
day  to  flow  in  upon  us  from  the  west.  .  .  .  Let  it  once  be 
seen  that  we  do  not  intend  to  aid  in  this  great  work  and  the 
roads  east  of  Missouri  will  be  made  to  diverge  to  points  where 
energy  and  enterprise  have  been  more  successful.  The  action 
of  our  present  legislature  is  to  settle  the  future  destiny  of 
Missouri."^  Thus  the  one  thing  which  now  seemed  almost  fully 
established  was  that  the  natural  advantages  of  Missouri  and  of 
St.  Louis,  the  Missouri  and  Mississippi  rivers,  were  inadequate  for 
present  and  especially  for  future  needs.      Railways  must  be  built. 

The  great  question  now  to  be  answered  was  how  to  secure 
funds  for  the  construction  of  the   necessary   lines.     The  experi- 

^  Laws  of  Missouri,  1849,  p.  647.  T' Senate  Journal,  1S31 ,  p.  36. 

"^  Ibid.,  p.  116. 


BEGINNING    OF    THE    POLICY    OF    AIDING    RAILWAYS  63 

ences  of  other  states,  which  have  been  already  considered,  were 
sufficient  to  give  a  decided  negative  to  one  possible  course  for 
the  state  to  pursue.  These  experiences  demonstrated  conclu- 
sively to  the  people  of  Missouri  that  the  state  should  not  attempt 
the  construction  and  operation  of  roads  wholly  as  a  state  enter- 
prise. "  Furthermore,"  says  Governor  King,  "it  is  presumed  that 
the  people  are  not  prepared  for  that  increase  of  taxes  which 
would  be  required  to  meet  even  the  interest  upon  such  a  debt  as 
the  immediate  construction  by  the  state  of  any  considerable  por- 
tion of  the  projected  improvements  would  necessarily  entail."^ 
This  being  the  case,  no  funds,  to  be  sure,  for  actual  construction 
could  be  raised  by  taxation.  The  state  might  have  become  a 
stockholder  in  the  proposed  roads  and  issued  her  bonds  for  that 
purpose  as  had  been  done  between  1837  ^"^  1840  to  a  great 
extent  by  Virginia  and  some  other  states.  But  Missouri  was 
now  trying  this  plan  in  her  attempt  to  assist  banking  enterprises, 
and  had  already  found  it  a  very  costly  one.  So  in  185 1  the 
governor  had  to  say  concerning  this  manner  of  aiding  internal 
improvements,  "  I  deprecate  the  policy  of  the  state  becoming  a 
large  stockholder,  or  engaging  in  any  considerable  work  of 
internal  improvement,"  as  tending  to  "  overwhelm  the  state  in 
debt,  without  any  means  of  extricating  itself  except  by  a  bur- 
densome tax  upon  the  people. """ 

But  private  enterprise  unassisted  could  not  in  185 1  be 
depended  upon  to  take  the  matter  in  hand.  The  population  of 
the  state  was  only  682,907,  possessing  a  taxable  wealth  of  only 
$89,460,803.3  It  is  evident  that  in  a  state  of  such  limited 
resources  companies  could  not  be  formed  for  the  construction  of 
lines  of  railway  demanding  large  amounts  of  capital.  Further- 
more, the  whole  of  the  resources  of  private  individuals  capable 
of  being  devoted  to   railroad  enterprises  could  not  at  this  time 

'^  Senate  Journal,  184Q,  p.  43. 

^  Senate  Journal,  1831,  p.  36. 

'^  Auditor's  Report,  1850,  pp.  16-17;  to  get  this  amount  the  writer  estimated  the 
value  of  slaves  on  the  basis  of  the  unit  of  taxes  paid  on  town  lots  and  land.  The  U. 
S.  Census  of  1870,  Industry  and  Wealth,  p.  10,  puts  the  wealth  of  the  state  for  1850  at 
$137,247,000. 


64  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

be  called  forth.  This  is  quite  obvious  from  the  considerable 
amount  of  attention  which  was  still  given  to  the  question  of 
improving  the  small  streams  of  the  state.  As  late  as  the  fall  of 
1849  the  leading  periodical  of  the  state  said  editorially:  "If  the 
rivers  of  the  state  of  Missouri  were  improved  by  dams  and 
locks,  so  as  to  afford  slack-water  navigation  as  far  as  practicable, 
there  would  exist  no  great  necessity  for  railways ;  for  such 
improvements,  in  connection  with  macadamized  or  planked 
roads,  would  afford  the  means  of  transportation  to  every  part  of 
the  state."' 

§2.  As  it  was  regarded  bad  policy  for  the  state  to  engage 
in  the  work  of  actual  construction  or  to  aid  in  the  construction 
of  the  roads  by  becoming  a  stockholder,  and  as  private  capital 
unaided  was  not  equal  to  the  task,  the  only  course  open  by  which 
the  people  of  Missouri  could  get  the  desired  means  of  transpor- 
tation was  that  of  combining  private  capital  with  public  credit. 
In  185 1  Governor  King  says :  "With  the  aid  which  the  state  can 
give,  and  in  a  way  by  no  means  oppressive  to  its  citizens,  the 
roads  can  be  built;  without  this  aid  the  work  must  fail."^  As 
there  was  not  sufficient  capital  in  the  state,  capital  must  be 
imported  ;  and  this,  it  was  thought,  could  best  be  done  by  using 
the  credit  of  the  state.  It  was  also  held  that  by  using  the  public 
credit  simply,  the  state  did  not  become  involved  in  the  manage- 
ment of  the  roads  in  any  way.  This  was  thought  to  be  best 
because  private  enterprise  was  "generally  found  to  be  more 
keenly  alive  to  the  proper  direction  of  works  of  this  character 
than  the  public,  acting  through  their  officers,"  who  did  "not 
always  feel  an  immediate  responsibility."^ 

As  indicative  of  the  caution  and  good  sense  of  the  legisla- 
ture, the  decision  made  in  the  beginning  of  the  experiment  to 
aid  only  a  limited  number  of  roads,  was  of  the  greatest  impor- 
tance to  the  undertaking  as  a  whole.     The  Senate  committee  on 

'  Western  Journal  and  Civilian. 
''Senate  Journal,  1831,  p.  37. 

3  Report  of  Senate  Committee  on  Internal  Improvements,  Senate  Journal,  /Sj;/, 
Appendix,  p.  246. 


BEGINNING    OF    THE    POLICY    OF    AIDING    RAILWAYS  65 

internal  improvements,  after  recommending  the  aiding  of  the 
Hannibal  and  St.  Joseph  and  the  Pacific  railroads,  stated  that, 
although  there  were  some  other  "subjects  of  a  kindred  nature 
before  the  committee,"  they  were  of  the  "opinion  that  these  two 
railroads  ought  to  be  distinctly  presented  and  considered  sepa- 
rately from  other  schemes  of  improvement."  It  was  indeed 
true,  as  the  governor,  in  recommending  state  action  said,  that  the 
great  error  in  the  efforts  of  the  people  of  Missouri  in  making 
improvements  had  been  that  they  had  "not  given  the  energies 
of  the  state  to  the  completion  of  one  or  two  objects  at  a  time."' 

§  3.  As  a  result,  therefore,  of  the  increasing  commercial 
activity  of  the  times,  and  in  accordance  with  the  recommenda- 
tions of  the  governor  and  the  wishes  of  the  best  informed  and 
most  energetic  people  of  the  state,  the  legislature  passed  the 
first  act  February  22,  185 1,  granting  aid  to  the  railway  enter- 
prises.^ Only  two  roads  were  aided,  the  Hannibal  and  St. 
Joseph  and  the  Pacific.  To  the  Hannibal  and  St.  Joseph  there 
was  granted  1.5  million  dollars,  and  to  the  Pacific  two  million 
dollars  in  the  bonds  of  the  state. 

Although  the  plan  of  aiding  railways  now  adopted  was  more 
or  less  changed  during  its  future  development,  the  main  features 
remained  the  same.  These  were  ( i )  that  the  roads  aided  must 
have  a  certain  bo7ia  fide  subscription  to  their  capital  stock  before 
any  bonds  of  the  state  would  be  granted;  (2)  as  often  as  a 
certain  sum  was  spent  by  the  companies  in  actual  construction 
the  state  was  to  issue  its  bonds  to  the  companies  for  a  like 
amount,  to  be  sold  by  the  companies  at  not  less  than  par. 
In  the  case  of  the  two  roads  aided  the  botia  fide  subscription 
was  1.5  million  dollars  each,  and  the  amount  to  be  spent 
before  receiving  an  issue  of  bonds  was  $50,000.  After  the 
expenditure  of  each  $50,000  of  private  funds  the  governor  was 
to  issue  $50,000  of  the  bonds  of  the  state  until  the  state  grant 

'^Senate  Journal,  18^1,  p.  36. 

^  Compilation  of  the  Laws  in  Reference  to  such  Railroads  as  have  received  Aid  from 
the  State,  p.  60. 


66  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

was  consumed.  For  convenience,  this  may  be  styled  the  dollar- 
for-dollar  policy  in  blocks  of  $50,000  each.  The  bonds  of  the 
state  granted  to  the  companies  were  6  per  cent,  twenty-year 
bonds.  As  a  security  to  the  state  for  the  bonds  issued  the  com- 
panies were  to  give  the  state  a  first  lien  on  the  roads. 

The  condition  of  the  state  financially  at  this  time  was  good.  It 
had  an  annual  income  of  more  than  a  quarter  of  a  million  dollars, 
property  was  rated  low,  and  the  rate  of  taxation  was  not  high. 
The  taxes  levied,  however,  were  of  several  kinds  ;  there  were 
taxes  on  polls,  lands,  town  lots,  salaries,  notes  and  bonds,  and 
personal  property.  The  table'  below  gives  the  amounts  yielded 
by  those  taxes  respectively  in  1850.  The  debt  of  the  state  at 
this  time  was  only  $764,629,^  which,  of  course,  was  not  felt  to 
be  a  burden. 

The  state  had  now  entered  upon  an  enterprise  which  was  for 
seventeen  years  to  demand  almost  the  whole  attention  of  the 
administrative  officers  of  the  state,  which  was  then  to  be  sur- 
rendered to  private  enterprise  for  completion  and  which  was  to 
leave  a  debt  upon  the  state  that  would  not  be  paid  off  until 
a  period  of  more  than  fifty  years  had  elapsed  from  the  time  of 
the  beginning  of  the  experiment. 

Items  Valuation  in  1850  Revenue  yielded 

'            Polls,  85,546             -         -         -          $32,152.65 

Lands,  9,511,251  acres  -         -    $36,099,407  72,511.74 

Town  lots,  34,663.5  -         -           24,563,830  49,127.68 

Slaves,  69,422  -         -         -      Not  given.  39,215.19 

Salaries             -         -         -         -          1,237.97 

Notes  and  bonds          -         -         -     12,821.73 

Personal  property  -         -           10,797,566  21,689.22 

$228,756.18 
See  Auditor's  Report,  1850,  Senate  Journal,  1831,  Appendix,  pp.  16-17. 

*  This  is  exclusive  of  the  amount  ($272,263)  of  stock  owned  by  the  state  in  the 
Bank  of  Missouri,  but  inclusive  of  the  amount  ($124,026)  which  the  state  owed  to  the 
bank. — Ibid. 


CHAPTER  III. 

THE    EXECUTION    OF    THE    POLICY  OF    STATE  AID.      1851-1860. 

§  I.  Two  companies,  the  Hannibal  and  St.  Joseph  and  the 
Pacific,  which  would  construct  main  lines  of  railway  across  the 
state  from  east  to  west,  were  now  already  aided  to  the  amount  of 
2.5  million  dollars.  And  as  has  already  been  seen,  there  were  other 
applicants  for  aid  before  the  internal  improvement  committees  of 
the  legislature  when  the  above  amount  of  bonds  was  granted  in 
February  185  i.  Now  that  these  two  companies  had  been  aided, 
former  applicants  or  new  ones  came  forward  in  a  short  time  to 
ask  for  like  favors.'  And  in  course  of  time  the  state  extended 
aid  to  four  other  companies,  and  further  aid  to  the  Pacific  for 
an  extensive  branch  of  its  road.  The  new  companies  to  be 
aided  were  (i)  the  North  Missouri,  incorporated  March  3,  1851,^ 
which  was  to  construct  a  railroad  from  the  town  of  St.  Charles, 
passing  up  the  divide  between  the  tributaries  of  the  Mississippi 
and  Missouri  rivers  to  the  northern  boundary  of  the  state  ;3  (2) 
the  St.  Louis  and  Iron  Mountain  incorporated  also  March  3, 
i85i,''  which  was  to  build  a  road  from  the  City  of  St.  Louis,  or 
some  point  on  the  main  line  of  the  Pacific  Railroad  to  the 
Iron  Mountain  or  Pilot  Knob,  and  to  have  the  privilege  of  extend- 
ing the  road  within  ten  years  to  the  Mississippi  river  at  Cape 
Girardeau,  or  at  any  point  below  that  city  within  the  state,  or  to 
extend  the  road  from  the  Iron  Mountain  to  the  southwestern 
boundary  of  the  state ;  (3)  The  Platte  County,  incorporated 
February  24,  1853,^  which  would    construct  a  railway   from  the 

'^  House  Journal,  18^3,  Appendix,  pp.  3-6  and  27-37. 

^  Compilation  of  the  Laws  in  Reference  to  such  Railroads  as  have  been  aided  by  the 
State,  p.  28. 

^  House  Jourjial,  /8js,  Appendix,  pp.  27-29. 

^  Compilation  of  the  Laws  in  Reference  to  such  Railroads  cic,  p.  40.       ^  Ibid.,  p.  50. 

67 


68  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

western  terminus  of  the  Pacific  Railroad  in  Jackson  county  north- 
ward to  St,  Joseph,  and  would  have  the  privilege  of  extending 
the  road  to  the  northern  boundary  of  the  state  ;  and  (4)  The 
Cairo  and  Fulton,  incorporated  February  20,  1855/  This  latter 
company  contracted  to  construct  a  railway  from  a  point  on  che 
Mississippi  river  opposite  the  mouth  of  the  Ohio  at  Cairo  to  the 
northern  boundary  of  Arkansas  where  the  Cairo  and  Fulton  rail- 
road of  that  state  crossed  the  line.  The  Southwest  Branch  of 
the  Pacific  Railroad  had  its  genesis  after  Congress  had  made  to 
the  state  the  grant  of  lands  for  railroad  purposes  which  had  been 
the  burden  of  so  many  memorials  in  past  years.  The  Pacific 
Railroad  Company  quickly  perceived  from  the  terms  of  the  grant 
that  the  portion,  which  would  fall  to  it  along  the  route''  already 
marked  out  to  the  western  boundary  of  the  state  near  the  mouth 
of  the  Kansas  River,  would  be  a  much  more  limited  amount, 
(because  of  the  great  number  of  pre-emptions  already  made)  than 
the  company  had  hoped  for.  However,  along  a  route  which  could 
be  selected  south  of  the  Osage  River  in  Missouri  and  extending 
to  the  western  boundary  of  the  state,  a  large  amount  of  land 
could  be  obtained.  As  two  lines  of  railway  were  regarded  by 
the  company  as  better  than  one,  they  expressed  the  willingness 
to  undertake  the  construction  of  a  branch  road,  to  leave  the  main 
line  near  St.  Louis  and  extend  to  the  boundary  of  the  state  near 
the  southwest  corner,  on  the  condition  that  a  further  grant  of 
aid  be  given  to  the  company.  In  accordance  with  the  recom- 
mendation of  the  company  the  right  to  construct  a  branch  road 
was  granted  to  it  December  25,  1852  ;3  this  branch  was  afterwards 
known  as  the  South  West  Branch  of  the  Pacific  Railroad. 

§  2.  The  charter  privileges  of  the  roads  aided  by  the  state 
were  in  no  way  essentially  different  from  those  which  were  not 
aided.  All  of  the  railroad  charters  in  Missouri  at  this  time  give 
evidence  that  the  questions  had  already  arisen  there  which  have 

'  Compilation  of  tJie  Laws  i?i  Reference  to  such  Railroads  etc.,  p.  55. 

=  i%«i'fy(3«r«(7/, /lYfj,  Appendix,  pp.  3-6. 

3  Compilation  of  the  Laivs  in  Reference  to  such  Railroads  etc.,  p.  109. 


EXECUTION    OF    THE    POLICY    OV    STATE    AID  69 

caused  so  much  controversy  from  the  origin  of  railways  to  the 
present  time  and  which  are  by  no  means  as  yet  fully  settled. 
The  state  did  not  attempt  at  the  beginning  to  fix  rates  for  the 
transportation  of  either  persons  or  commodities;  the  companies 
were  allowed  "to  charge  and  receive  such  tolls  and  freights  for 
the  transportation  of  persons,  commodities  or  carriages"  on  their 
roads  as  would  be  "to  the  interest"  of  the  companies,'  or  in 
other  words  the  companies  might  receive  such  tolls  and  freights 
as  were  "determined  on  by  the  directors."  Rates  of  tolls  and 
freights  were  to  be  kept  posted  up  in  all  station  houses.  In  some 
of  the  charters  of  1849  ^  maximum  limit  of  passenger  and  freight 
rates  was  imposed  upon  the  companies.  These  rates  were  "not 
to  exceed  ten  cents  per  mile  for  passengers  and  twenty-five  cents 
per  ton  per  mile  for  freight."-  The  rate  of  dividends  was,  how- 
ever, in  some  cases  more  rigidly  limited.  The  Hannibal  and 
St.  Joseph  and  the  Platte  County  railroad  companies  could  not 
declare  dividends  to  a  "greater  amount  than  the  net  profits  after 
deducting  all  expenses;"^  this  provision  was  made  for  the  pur- 
pose of  securing  the  "integrity"  of  the  capital  stock.  In  the 
case  of  the  Hannibal  and  St.  Joseph  and  the  Iron  Mountain  com- 
panies, dividends  were  further  limited  to  not  more  than  20  per 
cent,  of  the  capital  stock  paid  in.*  The  charters  of  these  roads 
were  old  charters  of  the  style  of  1837  and  this  provision  limiting 
the  amount  of  dividends  was  possibly  retained  through  oversight. 
No  restrictions  were  placed  on  the  amount  of  dividends  for  the 
other  roads ;  they  were,  however,  to  be  declared  annually,  or 
oftener  if  necessary. 

The  matter  of  publicity  of  accounts  was  settled  in  a  summary 
way  in  the  charters  of  the  roads  and  by  the  general  law  regard- 
ing railroad  corporations.  The  books  and  accounts  of  the  com- 
panies were  to  be  open  at  all  times  to  the  inspection  of  any  agent 
of   the    state    appointed    for   the   purpose    of   examining    them. 

'  Compilation  of  the  Laws  in  Reference  to  such  Railroads  etc.,  pp.  13,  21,  31,  and  45. 
^  Laws  of  Missouri,  i84g,  pp.  173,  283,  and, 319. 

^  Compilation  of  the  Laivs  in  Reference  to  such  Railroads  etc.,  pp.  13  and  53. 
^Liid.,  pp.  13  and  45. 


70  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

And  the  completeness  of  the  report  to  be  made  according  to  the 
general  railroad  law  of  the  state  was  all  that  the  most  exacting 
could  have  desired.'  In  the  matter  of  publicity  of  accounts  it 
thus  seems  that  the  legislature  of  Missouri  attempted  to  secure 
in  the  beginning  what  has  proved  in  later  years  to  be  so  desirable 
and  yet  so  difificult  to  obtain.  Possibly  the  nearest  approach  to 
success  in  this  matter  in  any  state  of  the  Union  is  that  achieved 
by  the  railroad  commission  of  the  state  of  Massachusetts. 
Indeed  the  success  of  this  commission  regarding  railway  matters 
in  general  has  been  achieved  by  gradually  bringing  about  entire 
publicity  in  regard  to  all  those  matters  concerning  which  the 
commission  think  the  community  has  a  right  to  be  informed. 
Such  was  the  goal  of  this  commission  from  the  beginning."^  And 
the  early  railway  charters  in  Missouri  indicate  that  the  necessity 
of  such  a  course  was  at  that  time  clearly  perceived  in  that  state. 
There  was  also  present  in  the  minds  of  the  law-makers  of 
Missouri  the  idea  that  railroads  are  in  the  nature  of  things  a 
sort  of  public  institution,  and  that  sooner  or  later  they  must 
revert  to  the  state.  The  provision  that  the  roads  should  at  a 
future  date  revert  to  the  state  was  included  in  the  charters  of  all 
but  one  of  the  roads  aided  by  the  state  ;  but  it  was  not  common  to 
include  this  provision  in  the  charters  of  all  the  other  railroads 
incorporated  during  these  years. ^  It  was,  however,  included  in 
the  charter  of  the  St.  Louis  and  St.  Charles  Company,  granted 
February  20,  i85i,'*  and  in  that  of  the  Missouri  and  Mississippi 
Company,  granted  March  8,  1849.5  The  time  to  elapse  before 
reverting  to  the  state  was  for  the  first  of  these,  thirty  years,  and 
for  the  second,  fifty  years.  In  the  case  of  the  roads  to  be  aided 
by  the  state  the  limit  of  time  was  put  at  forty  years  for  two  and 
at  fifty  for  the  remaining  three.  The  form  of  acquiring  the 
roads  was  to  be  by  purchase  at  a  price  set  by  competent 
appraisers  mutually  selected  by  the  companies  and  the  state. 

'  Compilation  of  the  Laws  in  Reference  to  such  Railroads  etc.,  pp.  145-149. 

^  Railroad  Commissioner's  Report,  1872,  p.  clxx. 

^  Laws  of  Missouri,  i84g,  pp.  173,  283,  and  319. 

*Ibid.,  1831,  p.  365.  ^Ibid.,  i84q,  p.  377. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  7  I 

In  the  early  period  between  1837  '"^^^  1840  many  railroad 
companies  had  engaged  in  the  additional  business  of  banking 
and  often  to  their  great  loss.  Because  of  this  experience  and 
because  of  the  belief  that  the  two  branches  of  business  could  not 
be  carried  on  profitably  by  the  same  corporation,  the  railway 
charters  granted  in  Missouri  after  1847  expressly  forbade  the 
companies  to  employ  any  part  of  their  funds  in  any  way  in  the 
banking  business. 

Inasmuch  as  the  state  of  Missouri  now  regarded  herself  as 
having  entered  upon  a  race  with  other  states  in  the  extension  of 
railways  into  the  undeveloped  territory  of  the  South,  West,  and 
Northwest,  the  question  of  time  was  one  of  no  little  importance. 
The  time  allowed  to  the  companies  for  beginning  the  work  of  con- 
struction, however,  would  not  indicate  any  great  anxiety  on  the 
part  of  the  legislature  lest  other  roads  might  at  an  earlier  date  pene- 
trate to  the  regions  toward  which  Missouri  was  directing  her  lines. 
That  allowed  to  the  Hannibal  and  St.  Joseph  Company  before 
beginning  the  work  of  construction  was  three  years  from  the  date 
of  incorporation  (February  16,  1847)  ^^^  ^'^^  completing  the  road 
three  years  from  the  time  of  commencing  it.  The  Pacific  Rail- 
road Company  was  allowed  in  its  charter  (March  12,  1849) 
seven  years  in  which  to  begin  its  road  and  ten  years  thereafter  to 
complete  it.  The  North  Missouri,  which  was  to  be  the  highway 
over  which  the  trade  of  the  fertile  plains  of  Iowa  and  of  Min- 
nesota would  flow  into  St.  Louis,  was  given  nine  years  from  the 
date  of  its  charter  (March  3,  185 1)  for  beginning  the  work  of 
construction  and  twenty  years  thereafter  for  completing  it  to  the 
Iowa  line.^  At  this  rate  one  would  not  be  surprised  if  this  com- 
pany on  reaching  the  Iowa  territory  should  find  the  field  already 
occupied  by  other  companies.  The  St.  Louis  and  Iron  Moun- 
tain was  to  begin  the  work  of  construction  within  six  years  after 
the  date  of  incorporation  (March  3,  1851).  The  remaining  two 
roads,  the  Platte  County  and  the  Cairo  and  Fulton,  were  not 
incorporated  for  some  time  yet.  It  was  a  privilege  common  to 
all    the    railroads    of    the    state,   aided  or  unaided,  though   not 

'  Compilation  of  the  Laws  in  Reference  to  such  Railroads  etc.,  p.  31. 


72  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

always  so  stated  in  the  original  charter  acts,'  that  they  were 
exempted  from  taxation  until  they  were  completed  and  had  paid 
one  dividend. 

§3.  The  location  and  direction  of  the  lines  selected  by  the 
state  as  her  beneficiaries  indicate  the  general  form  which  the 
people  of  Missouri  thought  the  future  development  of  the  rail- 
way system  of  the  Mississippi  Valley  would  take.  To  be  sure, 
all  the  companies  to  which  the  state  was  to  grant  aid  were  not 
yet  incorporated  ;  but  only  one  of  the  two  railways  yet  to  be 
aided  was  of  much  significance ;  this  was  the  Platte  County, 
which,  as  has  already  been  stated,  was  to  extend  from  the  west- 
ern terminus  of  the  Pacific  Railroad  in  Jackson  county  north- 
ward to  St.  Joseph  and  thence  to  the  Iowa  line.  The  Cairo  and 
Fulton,  in  the  southeast  corner  of  the  state,  was  of  little  conse- 
quence. So  it  will  be  observed  that  the  system  of  railways  to 
be  aided  by  the  state  was  to  be  a  system  radiating  from  St. 
Louis.  Of  course  in  the  minds  of  Missourians  St.  Louis  was  to 
be  the  railway  center  of  the  Mississippi  Valley  ;  and  the  chief 
single  result  to  be  achieved  by  these  railways  was  the  building 
up  of  this  municipality.  Three  of  the  railways  to  be  aided, 
together  with  the  South  West  Branch  of  the  Pacific,  started  either 
from  the  city  or  within  a  few  miles  of  it.  And  already  a  short 
line,  the  St.  Louis  and  St.  Charles,  had  been  incorporated  for 
the  purpose  of  extending  the  North  Missouri  to  St.  Louis.  The 
Hannibal  and  St.  Joseph  would  reach  St.  Louis  by  the  Missis- 
sippi River;  and  the  North  Missouri  would  cross  the  Hannibal 
and  St.  Joseph,  thereby  giving  it  additional  access  to  the  city. 
The  Platte  County  Railroad  was  simply  a  northern  extension  of 
the  Pacific  at  its  western  terminus ;  the  Iron  Mountain  road 
would  be  extended  in  a  short  time,  it  was  hoped,  to  a  junction 
with  the  Cairo  and  Fulton  ;  and  in  course  of  time  these  would 
make  valuable  connection  with  railroads  in  the  south.  These 
lines  were   not   only  at   this   time,  but    for   some   time    to   come, 

'  See  section  12,  act  of  December  25,  1852.  Compilation  of  the  Laivs  in  Reference 
to  such  Railroads  etc.,  p.  67. 


EXECUTION"    OF    THE    POLICY    OF    STATE    Ain  73 

regarded  as  sufficient  to  supply  in  a  general  way  the  natural 
demands  of  the  Mississippi  Valley.  Although  the  Hannibal  and 
St.  Joseph  and  the  Pacific  extended  east  and  west,  and  the 
South  West  Branch  southwest,  the  system  was  founded  upon  the 
idea  that  the  natural  flow  of  commerce  would  be  from  north  to 
south.  The  Mississippi  River  woulci  continue  to  be  the  great 
central  highway  of  commerce,  as  it  was  believed  that  trade 
would  never  to  any  considerable  extent  flow  east  and  west  across 
the  continent.  It  was  expected  that  the  traffic  of  the  Hannibal 
and  St.  Joseph  and  of  the  Pacific  with  its  tributary,  the  Platte 
County  Railroad,  as  well  as  the  trafiic  of  the  North  Missouri, 
would  flow  through  St.  Louis.  This  would  be  the  case  because 
St.  Louis  lay  on  the  "natural  highway,"  the  Mississippi  River. 
Commerce  had  always  gone  up  and  down  this  river  and  always 
would  ;  the  only  demand  for  railroads  was  to  assist  nature,  not 
to  "triumph  over  her."  This  idea  is  to  be  kept  in  mind  in 
studying  the  growth  of  the  railroad  svstem  in  Missouri. 

^4.  The  first  work  of  railway  construction  in  Missouri  was 
done  on  the  Pacific  Railroad,  in  the  city  of  St.  Louis,  July  4, 
1851,^  only  a  few  months  afcer  the  first  grant  of  aid.  Very  lit- 
tle progress  was  made,  however,  upon  this  road  during  the  first 
year.^  The  Hannibal  and  St.  Joseph  Company  did  not  begin 
the  work  of  construction  until  the  spring  of  1853,  two  years 
after  receiving  its  first  grant  of  bonds. ^  Further  encouragement 
was  seemingly  necessary ;  and  this  encouragement  was  received 
in  June  1852  in  the  form  of  a  land  grant  from  the  Congress  of 
the  United  States  to  the  state  of  Missouri,  to  be  used  in  aiding 
the  construction  of  the  Hannibal  and  St.  Joseph  and  Pacific  rail- 
roads.4  For  this  purpose,  Congress  granted  "every  alternate 
section  of  land  designated  by  even  numbers  for  six  sections  in 
width  on  each  side  of  the  road;"  if,  however,  after   the   location 

^Kansas  City  Review  of  Science  and  Industry,  vol.  vii.  p.  167. 
-See  below,  p.  80. 

'^  Senate  Journal,  Adjourned  Session,  1833,  Appendix,  p.  94. 

+  United  States  Statutes  at  Large,  10,  p.  8  ;  also  Compilation  of  the  Lazvs  in  Reference 
to  such  Railroads  etc.,  p.  3. 


74  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

of  the  route  of  a  road,  it  was  found  that  any  of  those  sec- 
tions had  been  sold  by  the  government  or  pre-empted  by  set- 
tlers, then  the  company  would  be  allowed  to  select,  in  the  place 
of  such  sections,  other  sections  of  like  kind  outside  of  the  six- 
mile  limit  but  within  fifteen  miles  of  the  road.  These  lands 
could  be  applied  to  no  other  purpose  than  that  for  which  they 
were  granted.  Recognizing  that  additional  value  would  neces- 
sarily accrue  to  the  intermediate  sections  of  land  remaining  in 
its  possession,  the  government,  as  was  usual  in  all  grants  of  this 
kind  during  these  times,  stipulated  that  these  sections  should 
not  be  sold  for  less  than  double  the  minimum  price  (^1.25  per 
acre)  of  public  lands.  Only  120  sections  on  a  continuous 
length  of  the  road  for  twenty  miles  could  be  sold  while  this  par- 
ticular twenty  miles  were  building;  if  the  railroads  were  not 
completed  in  ten  years,  the  companies  were  to  make  no  further 
sales,  and  the  remaining  lands  would  revert  to  the  government. 
In  making  this  grant,  as  in  making  other  similar  grants,  it  was 
provided  that  these  railroads  should  "be  and  remain  public 
highways  for  the  use  of  the  government  of  the  United  States, 
free  from  toll  or  other  charges  upon  transportation  of  any  prop- 
erty or  troops  of  the  United  States,"  and  that  the  "United  States 
mail"  should  "at  all  times  be  transferred  over  [these]  railroads, 
under  the  direction  of  the  Post  Office  Department,  at  such  rates 
as  Congress  might  by  law  direct." 

Following  this  land  grant  another  was  made  February  9, 
1853,  to  the  two  states  of  Arkansas  and  Missouri.  This  grant 
was  made  for  the  purpose  of  aiding  in  the  "construction  of  a 
railroad  from  a  point  on  the  Mississippi  opposite  the  mouth  of 
the  Ohio  River  via  Little  Rock  to  the  Texas  boundary  near 
Fulton  in  Arkansas,  with  branches  to  Fort  Smith  and  the  Mis- 
sissippi River."'  It  was  a  portion  of  this  grant  which  fell  to  the 
Cairo  and  Fulton  Railroad  Company  in  Missouri,  incorporated  at 
a  later  date. 

The  first  of  the  two  acts  just  mentioned  was  regarded  by  the 
friends  of  the  aiding  policy  as  a  great  boon  to  the  state.     Of 

'  Compilation  of  the  Laws  in  Reference  to  such  Railroads  etc.,  p.  5. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  75 

course  this  grant  had  to  be  apportioned  to  the  separate  railways 
by  the  legislature.  Governor  King,  regarding  the  occasion  an 
extraordinary  one  called  an  extra  session  of  the  legislature, 
August  4,  1852,  less  than  two  months  after  the  land  grant  was 
made,  for  the  purpose  of  enacting  such  laws  as  would  more 
effectually  and  economically  apply  the  grant.  During  this  ses- 
sion an  act  was  passed  to  accept  the  grant  upon  the  terms  stip- 
ulated in  the  congressional  act  and  to  "apply  a  portion  thereof  to 
the  Hannibal  and  St.  Joseph  Railroad."  ^  It  was  also  provided 
in  this  act  that  after  the  company  had  completed  its  road  and 
declared  a  dividend,  it  should  pay  the  same  rate  of  taxes  on  the 
road  and  all  the  property  pertaining  to  it  as  was  paid  on  all  other 
real  and  personal  property  in  the  state  ;  in  case  the  company 
failed  to  declare  a  dividend  within  two  years  after  the  comple- 
tion of  the  road,  then  it  should  no  longer  be  exempt  from  taxa- 
tion. In  addition  to  the  right  to  sell  the  lands  granted,  the 
company  was  given  the  right  to  issue  its  own  bonds  in  order  to 
secure  funds  and  guarantee  them  by  a  mortgage  on  a  part  or  all 
of  the  lands  granted;  the  faith  of  the  state  however  was  in  no 
way  pledged  for  the  redemption  of  the  bonds  issued  bv  the  com- 
pany. Although  similar  but  separate  bills  were  passed  by  both 
houses  at  the  extra  session  of  the  legislature  to  apply  a  portion 
of  the  grant  to  the  Pacific  Railroad,  no  bill  to  this  effect  became 
a  law  till  after  a  meeting  of  the  regular  session  in  the  following 
December.^ 

After  the  terms  of  the  grant  had  become  known  the  railway 
companies  naturally  became  anxious  to  know  how  much  land 
could  be  obtained  along  the  routes  already  laid  out  or  suggested. 
The  Pacific  Railroad  Company  was  more  concerned  about  this 
matter  than  was  the  Hannibal  and  St.  Joseph,  because  a  greater 
amount  of  lands  had  already  been  pre-empted  along  its  route; 
however,  the  route  of  the  Pacific,  west  of  Jefferson  city,  had  not 
yet   been   fully    determined. ^     The    company,    according   to    its 

'  Compilation  of  the  Laws  in  reference  to  such  Railroads  etc.,  p.  115. 

^  Senate  Journal,  iSjs-j,  pp.  65-73. 

'^  Senate  Journal,  /(?jj,  Appendix,  pp.  6-13. 


76  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

charter  was  under  obligations  to  extend  its  line  from  Jefferson 
City  to  the  western  boundary  of  the  state.  But  on  the  two 
routes  |)ossible  for  this  part  of  the  road  no  great  amount  of 
public  lands  remained  unsold  or  unclaimed;  at  best,  one  of  the 
routes  w^ould  yield  not  more  than  563,000  acres,  and  the  other 
not  more  than  400,000.'  Furthermore,  the  company  raised  the 
question  regarding  the  construction  of  the  law,  which  required 
the  railroad  "as  a  consideration  for  the  land,  to  remain  a  public 
highway,  free  of  use  to  the  government,  without  toll  or  other 
charge  for  the  transportation  of  troops,  munitions  and  other 
property  of  the  United  States."  The  company  thought  if  the 
law  meant  that  it  was  to  do  business  for  the  government  without 
the  usual  charges  made  against  individuals,  then  the  "land  ap- 
plied to  the  Kansas  route  would  be  a  burden  instead  of  a  benefit." 
That  this  may  have  been  a  shrewd  method  of  finding  grounds 
upon  which  to  make  a  further  plea  for  state  aid  is  not  improb- 
able. In  the  memorial  in  which  the  (juestion  is  raised,  the  com- 
pany asks  for  further  aid,  and  just  in  this  connection  adds  that 
under  the  doubtful  construction  of  the  law,  "if  it  were  possible 
to  provide  other  means  for  constructing  the  road  in  the  direction 
of  Kansas,  the  land  grant  might  very  properly,  and  perhaps  more 
advantageously  to  the  state,  be  applied  to  aid  in  the  construc- 
tion of  a  road  to  terminate  on  the  western  boundary  [of  the 
state]  south  of  the  Osage  River;"  upon  this  route  about  1.3  mil- 
lion acres  of  land  could  be  obtained  under  the  act.  Here  was 
also  a  "large  section  of  the  state  rich  in  minerals,  and  a  consid 
erable  part  of  it  fertile  in  agricultural  resources  [with]  no  facili- 
ties for  getting  to  market."  A  road  would  therefore  greatly 
develop  and  benefit  this  part  of  the  state.  In  these  suggestions 
is  to  be  found  the  genesis  of  the  South  West  Branch  of  the 
Pacific  Railroad.  To  construct  the  two  roads  was,  however, 
more  than  the  company  could  do  without  "the  fostering  aid  of 
the  state"  in  the  form  of  additional  legal  powers  and  a  further 
loan  of  public  funds. 

'See  Memorial   of  the  Company  to  the  General  Assembly  (December  13,  1852), 
Senate  Journal,  Adjourned  Session,  1835,  Appendix,  p.  8. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  "]"] 

The  estimates  given  by  the  company  at  this  time  of  the 
cost  of  the  line  to  Kansas  and  of  the  branch  to  the  south- 
west part  of  the  state  were  certainly  low,  although  they 
were  "considerably  higher"  than  those  made  earlier,  because 
of  the  "increased  price  of  iron  and  labor."'  The  cost  of 
of  the  route  to  Kansas  west  of  the  first  division,  a  distance 
246  miles,  was  put  at  6.3  million  dollars,  as  a  minimum,  and 
6.6  million  dollars,  as  a  maximum.  The  maximum  limit 
would  make  the  cost  $26,820  per  mile.  The  estimate  of 
the  cost  of  the  line  to  the  southwest  was  put  up  at  a  mini- 
mum of  seven  million  dollars,  and  a  maximum  of  eight 
million  dollars.  For  the  distance  of  283  miles  this  would 
be  about  $28,200  per  mile.  It  is  of  course  quite  probable 
that  in  making  these  estimates  the  company  did  not  have  in 
mind  very  fully  equipped  and  perfected  railways.  The  cost 
of  railways  in  both  the  eastern  and  eastern-central  part  of  the 
United  States  had  been  published  in  periodicals  of  these  times, 
however,  and  these  published  figures  should  have  led  the  pro- 
spective builders  of  the  Missouri  railways  to  make  higher  esti- 
mates, especially  for  the  one  to  the  southwest,  which  was  to 
extend  through  a  very  rough  country.  In  another  respect 
also  were  the  estimates  and  statements  of  the  company  unre- 
liable. They  declared  that  although  the  cost  of  the  roads 
might  seem  at  first  sight  beyond  the  ability  of  the  company  to 
provide  for,  it  must  be  kept  in  mind  that  "experience  in 
railroad  construction  has  generally  shown  that  where  two- 
thirds  of  the  cost  of  the  work  can  be  raised,  the  other 
third  and  sometimes  the  whole  of  the  superstructure  and 
machinery  can  be  provided  for  by  the  credit  of  the  road 
itself  ;  [and]  it  seems  evident  that  we  are  able  to  provide 
more  than  this  ratio  of  means  to  cost  for  our  projected  lines 
and  still  our  capacity  has  not  been  fully  tested."  The  facts  as 
recorded  indicate,  however,  that  this  did  not  seem  evident 
at  that  time.  Of  the  estimated  cost  (6.6  million  dollars)  of 
the  line  to  Kansas,  the  company  had  only  1.5  million  dollars   in 

^  Senate  Journal,  Adjourned  Session,  /^jj,  Appendix,  p.  4. 


78  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

the  bonds  of  the  state,  and  $2,714,700  in  stock"  subscriptions, 
both  of  which,  so  far  as  they  should  be  used,  would  constitute  a 
liability  against  the  credit  of  the  roads  ;  and  as  for  the  resources 
represented  by  the  land  grant,  they  were  wholly  prospective.  For 
the  branch  to  the  southwest,  estimated  at  eight  millions  of  dollars, 
the  company  had  yet  no  subscriptions  to  its  stock,  and  no  cash  ; 
it  was  "reported"  that  the  stock  subscribed  by  counties  in  the 
southwest  for  the  proposed  line  amounted  to  more  than  $500,- 
000,  but  this  "included  $200,000  understood  to  be  subscribed 
by  the  Cherokee  Indians."  Indeed,  few  railroad  men,  even  of 
that  time,  would  have  regarded  a  subscription  by  Indians  of 
$200,000,  which  existed  only  in  hearsay,  as  desirable  collateral. 
It  is  thus  clear  that  two-thirds  of  the  funds  necessary  for  con- 
structing the  two  lines  had  not  been  raised. 

About  this  time  also  the  people  of  Washington  county 
requested  the  Pacific  Railroad  Company  to  undertake  the  con- 
struction of  a  branch  road  from  St.  Louis  to  the  Iron  Moun- 
tain, This  road  would  be  on  the  same  route  or  practically 
the  same  route  as  that  already  surveyed  for  the  St.  Louis  and 
Iron  Mountain  Railroad.  The  Pacific  Company  spent  $3,882 
in  surveying  the  route  and  expressed  a  willingness  to  under- 
take the  construction  of  the  branch  road  if  the  state  would 
grant  aid  for  the  purpose.  The  estimate  for  this  branch  of 
about  eighty-five  miles  in  length  was  put  at  1.7  million  dollars, 
or  $20,000  per  mile.  The  company  therefore  asked  that  one 
million  dollars  of  state  bonds  be  granted  for  the  branch  to  the 
southwest  and  $750,000  for  the  branch  from  St.  Louis  to  the 
Iron  Mountain. 

In  addition  to  the  Pacific  Railroad,  the  North  Missouri  also 
importuned  the  legislature  of  the  state  for  aid.  This  company 
hoped  for  a  grant  of  land  in  the  future  ;  at  present,  however, 
it  could  hope  for  nothing  more  than  a  grant  of  bonds  similar  to 
the  grants  that  had  been  made  to  the  Pacific,  and  Hannibal  and 
St.  Joseph  companies.  This  road  was  to  be,  as  already  stated, 
"one  part  of  the  great  trunk  line  from  the  north  to  the  south  on 

'  Senate  Journal,  1833,  Appendix,  p.  38. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  79 

the  west  side  of  the  Mississippi,  uniting  the  fertile  lands  of  the 
Minnesota  territory  with  the  cotton  and  sugar  fields  of  Louisi- 
ana," and  thus  giving  a  new  outlet  to  the  products  of  the  north 
at  the  Gulf  of  Mexico/  The  company  considered  the  land 
through  which  this  road  extended  equal  in  "fertility  and  capac- 
ity" to  that  through  which  the  Chicago  and  Galena  Railroad  of 
Illinois  extended, —  a  road  which  was  "  paying  dividends  of  18 
per  cent,  per  annum,  without  having  reached  a  terminus."  The 
estimate  of  the  cost  of  this  line  was  also  very  low.  The  length 
of  the  road  from  St,  Louis  to  the  northern  boundary  of  the 
state  was  estimated  to  be  two  hundred  and  fifty  miles  and  would 
cost  "completed  and  stocked"  five  millions  of  dollars. 

Missouri  at  this  time  had  in  a  small  but  in  no  insignificant 
way  an  experience  similar  to  that  of  other  states  of  a  later 
period,  in  inserting  into  her  railroad  laws  requirements  so  rigid 
as  to  hinder  the  investment  of  capital.  The  general  corporation 
law  passed  by  the  legislature  in  March  1845  contained  a  pro- 
vision imposing  upon  all  stockholders  in  corporations,  unless 
otherwise  expressly  stated  in  the  individual  charters,  a  liability 
double  the  amount  of  stock  owned. ^  It  had  already  been  found 
necessary  to  grant  exemptions  from  this  requirement  to  the 
Pacific,  and  the  Hannibal  and  St.  Joseph  companies.  Individ- 
uals were  now  ready  to  subscribe  to  the  stock  of  the  North  Mis- 
souri Railroad,  but,  as  they  stated,  they  could  not  "  for  the  sake 
of  obtaining  the  profits  upon  one  hundred  dollars  incur  the  lia- 
bility of  paying  two  hundred  more."^ 

Before  considering  the  grants  of  aid  which  were  made  in 
answer  to  the  importunities  of  the  Pacific  and  North  Missouri 
Railroad  Companies,  attention  should  be  directed  for  a  moment  to 
the  progress  in  construction  made  by  the  Pacific.  The  whole  of 
the  first  division,  thirty-seven  miles  west  from  St.  Louis,  was 
expected  to   be   completed   and  ready  for  use    in  the  spring  of 

'Memorial  of  the  North  Missouri  Railroad  Convention  to  the  General  Assembly  of 
Missouri,  Senate  Journal,  1853,  Appendix,  pp.  27-36. 

^  Revised  Statutes  of  Missouri,  1845,  p.  233  ;  also  Senate  Journal,  /SjS,  Appendix, 
p.  27. 

3  Senate  Journal,  /Sjj,  Appendix,  p.  28. 


80  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

1853  ;  a  few  miles  of  this  were  already  completed  in  December, 
1852.  The  preliminary  survey  and  the  securing  of  the  right  of 
way  were  nearly  completed  on  the  Kansas  route  and  the  com- 
pany was  then  only  waiting  the  action  of  the  legislature  "  to  make 
a  final  location  and  to  place  another  division,  if  not  the  whole 
road,  under  contract."  "On  the  first  of  December  [1852]  the 
first  locomotive  west  of  the  Mississippi  River  was  launched  upon 
the  track,  and  on  the  ninth  the  first  passenger  train  ran  over  the 
road  a  few  miles  west  of  St.  Louis  as  far  as  completed."' 

The  aid  granted  December  1852  is  the  second  grant  made 
by  the  state. ^  At  the  same  time  a  portion  of  the  congressional 
land  grant  of  June  10,  1852,  was  transferred  to  the  Pacific  rail- 
road company. 3  This  company  was  also  given  the  right  at  this 
time  to  construct  the  branch  road  to  the  southwest  part  of  the 
state,  as  already  mentioned.  To  this  branch,  now  known  as  the 
South  West  Branch  of  the  Pacific  Railroad,  land  was  given  by  the 
state  in  the  same  manner  as  to  the  main  line  of  the  road.  And 
the  bonds  of  the  state,  to  the  extent  of  one  million  dollars,  in 
accordance  with  the  request  of  the  company  were  also  granted 
to  aid  in  its  construction.  For  additional  funds  for  the  construc- 
tion of  the  branch  roads  the  act  gave  the  company  all  power  to 
issue  bonds  at  rates  of  interest  not  exceeding  7  per  cent,  per 
annum,  payable  semi-annually,  and  to  secure  the  payment  of 
the  bonds  by  a  mortgage  on  the  lands  granted  ;  but  the  faith  of 
the  state  was  in  no  manner  pledged  for  the  redemption  of  the 
bonds.  In  addition  to  the  grant  to  the  branch  road  one  million 
dollars  were  granted  in  the  bonds  of  the  state  to  be  used  upon 
the  main  line.  It  was  also  added  that  this  line  must  be  com- 
pleted "  to  its  terminus,  in  Jackson  county,  and  put  into  opera- 
tion within  five  years  after  the  passage  of  this  act." 

Authority  to  construct  another  branch  road,  the  St.  Louis 
and  Iron  Mountain,  heretofore  mentioned,  was  also  given  to  the 
Pacific   Railroad  Company  in  a  separate  act   of  the  same   date. 

^  Senate  Journal,  1833,  Appendix,  p.  5. 

"  Compilation  of  the  Laws  in  Refere7tce  to  such  Railroads  etc.,  pp.  63,  105  and  109. 

3  Ibid.,  p.  63. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  8l 

The  St.  Louis  and  Iron  Mountain  Railroad  Company  had  been 
incorporated  as  an  independent  company  March  3,  185 1  ;  but  in 
the  act  of  December  25,  1852,  the  road  is  described  as  the  Iron 
Mountain  Branch  of  the  Pacific  Railroad  ;'  and  the  bonds  of  the 
state  to  the  extent  of  $750,000  are  granted  to  the  Pacific  Rail- 
road Company  to  be  used  in  the  construction  of  this  branch.^ 

Up  to  this  time  the  route  of  the  Pacific  Railway  had  not  been 
formally  determined  by  statute  ;  but  it  was  now  definitely  stated 
that  it  would  extend  through  Jefferson  City,  and  then  westward 
by  the  most  practicable  inland  route  through  Johnson  county  to 
any  point  in  Jackson  county  which  might  be  designated  by  the 
company,  in  spite  of  anything  to  the  contrary  which  might  be  in 
its  charter.  The  inland  route  west  of  Jefferson  City  was  to  be 
binding  on  the  compan}^  however,  only  on  the  condition  that 
the  counties  through  which  this  route  lay  should  subscribe  to 
the  capital  stock  of  the  company,  $400,000  in  addition  to  what 
had  already  been  subscribed.  In  case  this  subscription  were  not 
made  the  company  was  to  be  free  in  selecting  the  route  between 
Jefferson  City  and  its  terminus  in  Jackson  county. 

The  route  of  the  Pacific  Railroad  was  now  in  a  measure  defi- 
nitely determined  as  far  as  the  western  boundary  of  the  state.  In 
order  that  the  road  should  be  more  than  merely  a  Missouri  rail- 
way, and  should  at  the  earliest  possible  date  reach  the  territory 
west  of  the  state,  another  act  was  passed  soon  after,  giving  the 
company  the  right  to  construct  and  operate  its  road  to  any  point  or 
points  west  of  the  boundary  of  Missouri. ^  As  no  land  could  be 
devoted  to  this  North  Missouri  Railroad  the  legislature  was  more 
favorable  in  the  matter  of  granting  bonds.  The  road  was 
granted  two  million  dollars   in  6  per  cent,   twenty-year  bonds  of 

'  Compilation  of  the  Laws  in  Reference  to  such  Railroads  etc.,  p.  109. 

^  In  case  this  branch  remained  in  the  hands  of  the  Pacific  R.  R.  the  bona  fide  sub- 
scription to  its  capital  stock  necessary  to  secure  an  issue  of  the  state  bonds  had  to  be 
only  $300,000.  But  in  case  the  Pacific  R.  R.  Company  did  not  begin  the  work  of  con- 
struction within  twelve  months  from  the  date  of  this  act  (December  25,  1852),  the  lease 
of  the  state  should  be  transferred  to  the  St.  Louis  and  Iron  Mountain  R.  R.  Company, 
and  the  bona  fide  subscription  would  then  have  to  be  raised  to  $500,000  before  getting 
any  of  the  bonds  from  the  state. — Ibid.,  pp.  68  and  1 10. 

3  Compilation  of  the   Laws  in  Reference  to  such  Railroads  etc.,  p.  27. 


82  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

the  State,  which  were  to  be  delivered  in  blocks  of  ^50,000  each. 
No  bonds,  however,  were  to  be  delivered  until  the  company  had 
a  bo7ia  fide  subscription  to  its  capital  stock  of  one  million  dol- 
lars. As  in  the  case  of  the  other  roads  the  state  took  for  secu- 
rity a  first  lien  on  the  road  and  all  its  appurtenances. 

By  the  end  of  December,  1852,  the  five  lines  of  railway, 
which  constituted  the  great  system  of  roads  radiating  from  St. 
Louis  to  all  points  of  the  compass  west  of  the  Mississippi  River, 
had  all  received  aid  from  the  state ;  the  total  aid  granted 
amounted  to  $8,250,000.'  The  policy  of  aiding  the  roads  was 
looked  upon  with  much  favor  by  the  general  public.  Several 
months  before  the  acts  of  December  1852,  which  granted  in  all 
$4,750,000,  but  some  time  after  the  general  system  had  been 
conceived  and  the  granting  of  further  aid  was  a  foregone 
conclusion,  a  writer  states  in  behalf  of  the  Missouri  experiment, 
that  the  people  of  Missouri  "have  decided  for  themselves  what, 
under  Providence,  shall  be  their  destiny.  They  have  entered 
upon  measures  of  public  improvement  whose  vastness  is  only 
equaled  by  the  wisdom  which  has  planned  them  ;  and  such  is 
her  solid  wealth  and  credit  and  the  fixed  purpose  of  her  people 
that  they  will  certainly  carry  out  what  they  have  begun.  She 
will  not  be  stopped  either  by  any  failure  on  the  part  of  Con- 
gress to  do  her  justice  in  the  application  made  by  her  for  a  fair 
share  of  the  public  lands  but  will  push  to  completion  her  great 
roads. "^ 

The  actual  work  of  construction  was,  however,  a  matter-of- 
fact  business,  the  full  meaning  of  which  had  not  yet  dawned 
upon  the  corporations  which  were  so  hopeful  of  spreading  a  net- 
work of  railways  over  the  state.     The  Pacific  Railroad  Company 

'To  the  Pacific  Railroad,  act  of  Feb.  22,  1851         -         -  -          ^2,000,000 

"       Pacific  Railroad,  act  of  Dec.  25,  1852              -         -  -         1,000,000 

"       South  West  Branch,  act  of  Dec.  25,  1852            -  -             1,000,000 

"       Hannibal  and  St.  Joseph,  act  of  Feb.  22,   1851        -  -         1,500,000 

"       North  Missouri,  act  of  Dec.  23,  1852          .         .  -         .    2,000,000 

"       St.  Louis  and  Iron  Mountain,  act  of  Dec.  25,  1852  -             750,000 


5,250,000 


Hunt's  Merchatits'  Magazine,  vol.  xxvi.  (March    1852),  p.  309. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  83 

completed  and  opened  for  business  its  first  division  of  thirty- 
seven  miles  west  from  St.  Louis,  July  23,  1853.  This  division 
was  found  to  cost  $1,769,874,  or  upwards  of  $47,000  per  mile, 
an  amount  nearly  twice  as  great  as  at  first  estimated.  If  the 
cost  of  fencing,  side-tracks,  depots,  buildings,  and  rolling  stock, 
in  all  $170,149,'  be  deducted,  the  average  cost  per  mile  for  this 
roadbed,  "fullv  ballasted  for  about  three-fourths  of  its  length," 
would  be  $43,219.  Since  the  first  division  had  thus  so  far 
exceeded  the  early  estimates  concerning  it,  there  was  no  escape 
from  the  conclusion  that  the  second  division,  extending  from 
Franklin  to  Jefferson  City,  a  distance  of  eighty-eight  miles, 
would  also  cost  far  more  than  the  original  estimates.  The 
company,  near  the  close  of  1855,  estimated  that  the  amount  then 
necessary  to  complete  the  road  to  Jefferson  City  would  be  only 
$230,000.^  This  amount  added  to  the  amount  already  spent 
($6,473,670),  would  make  the  cost  of  the  road  to  Jefferson  City 
$6,703,670,  or  more  than  the  maximum  estimate  originally 
assigned  for  the  cost  of  the  whole  line  to  the  western  boundary 
of  the  state.  To  be  sure,  most  of  the  bonds  sold  to  secure 
funds  for  the  construction  of  the  road  were  sold  at  a  discount. 
However,  the  whole  of  the  interest,  discount,  commission,  and 
exchange  charges  up  to  this  time  amounted  only  to  $612,111, 
and  deducting  this  from  the  amount  actually  spent  in  construc- 
tion ($6,569,240),  the  cash  cost  of  the  road  to  Jefferson  City 
becomes  $5,957,129  for  125  miles  of  road,  or  $47,657  per  mile.^ 
The  funds  for  the  construction  of  this  portion  of  the  road 
were  provided  for  the  most  part  from  the  sale  of  bonds.  The 
whole  grant  of  state  bonds,  three  million  dollars, "thad  been  received 

■Fencing      -------  ;?30,558 

Side  tracks                 -.-..-  32,100 

Depots,  etc.         ------  13,091 

Rolling  stock             ..-.--  95,000 


$170,749 
— See  Senate  Journal,  ^Sjj,  Appendix,  p.  257. 

^Senate  Journal,  Adjourned  Session,  /Sss<  Appendix,  p.  199. 

3  See  Appendix  i.  Table  i. 

^  Ihid.\  also  Senate  Journal,  Adjourned  Session,  /8s5,  Appendix,  p.  115. 


84  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

and  sold,  netting  a  slight  premium.  The  contributions  of  St. 
Louis  City  and  St.  Louis  county  (each  $500,000  in  its  own 
bonds)  had  been  received  and  disposed  of.  In  the  spring  of 
1854,  however,  the  company  was  very  short  of  funds.  More 
had  been  expected  of  the  farmers  and  townspeople  along  the 
route  than  they  were  now  doing.  The  farmers,  whether  near 
the  road  or  not,  were  now  getting  higher  prices  for  their  prod- 
uce than  a  few  years  previous,  and  did  not  see  any  profit  in 
subscribing  to  an  enterprise  which  would  yield  a  return  only  at 
a  more  or  less  distant  date.  The  Western  Journal  and  Civilian 
characterized  the  situation  graphically,  and  championed  the 
interests  of  the  road  by  calling  upon  the  taxpayers  of  St.  Louis 
county  to  respond  to  the  request  recently  made  by  the  com- 
pany for  an  immediate  subscription  of  1.2  million  dollars  to  the 
capital  stock  of  the  road.  According  to  this  journal,  the  inter- 
ests of  Missouri  now  suffered  through  the  action  of  three  ele- 
ments of  opposition  to  the  success  of  this  road:  "(i)  The 
force  that  is  applied  to  the  Iowa  route,  and  is  already  building 
a  bridge  across  the  Mississippi  at  Rock  Island  ;  (2)  the  force 
that  is  applied  to  the  Texas  route  and  has  already  obtained  a 
grant  of  land  twenty  miles  in  width  from  the  Sabine  to  the 
Rio  Grande;  (3)  the  force  of  inertia  —  the  indisposition  of  the 
people  of  Missouri  to  build  the  Pacific  road  through  their  own 
state  immediately  out  of  their  own  resources."'  The  people  of 
St.  Louis  county,  being  very  anxious  that  the  road  should  make 
progress  as  fast  as  possible,  responded  to  the  call  for  help  and 
came  forward  with  a  gift  of  1.2  million  dollars  in  cash,  payable 
in  annual  installments  running  through  four  years.  The  county 
anticipated  the  gift,  however,  by  issuing  short-time  bonds  to  the 
company.''  Of  this  amount  the  company  had  received,  before 
the  close  of  1855,  $875,000;  and  yet  so  urgent  was  its  need  of 
funds  that  it  issued  its  own  bonds  to  the  amount  of  $348,000, 
based  upon  the  remaining  portion  of  the  St.  Louis  grant. ^    From 

'Vol.  xi.  (March  1854),  p.  62. 

^  Senate  Journal,  Adjourned  Session,  1855,  Appendix,  p.  28. 

^Senate  Joui-nal,  1855,  Appendix,  p.  249. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  85 

counties  and  individuals  the  sum  of  $928,692  in  cash  had  been 
received.  In  the  spring  of  1855  the  company  was  again  so 
pressed  for  funds  that  the  state  made  it  two  special  short-time 
loans,  one  of  $200,000,  and  one  of  $300,000.'  The  conditions 
upon  which  the  company  was  to  obtain  the  second  loan  were, 
however,  never  fully  complied  with,  and  therefore  the  special 
bonds  of  this  amount  were  never  issued  by  the  state.^  From 
other  sources  some  further  minor  amounts  were  raised  ;  up  to 
this  time  the  net  receipts  from  transportation  and  rents  of 
property  had  amounted  only  to  $55, 853. ^ 

The  route  of  the  South  West  Branch  was  finally  located 
November  16.  1853.'*  This  route  would  extend  from  Franklin 
on  the  main  line  of  the  Pacific,  thirty-seven  miles  from  St.  Louis, 
in  a  southwesterly  direction,  descending  into  the  valley  of  the 
Gasconade  eighty-nine  miles  from  Franklin ;  this  constituted 
the  first  division.  Continuing  in  a  southwesterly  direction  190 
miles  from  Franklin  it  would  reach  Springfield,  the  terminus  of 
the  second  division.  Thence  the  third  division  of  the  route 
would  extend  to  the  western  boundary  of  the  state  in  New- 
ton county,  283  miles  from  Franklin  and  320  miles  from  St. 
Louis. 5 

The  finances  of  this  road  were  not  in  a  promising  condition 
when  work  was  first  begun  on  it  in  June  1855.^  ^^^  $500,000 
subscription  necessary  in  order  to  secure  the  first  installment  of 
the  state  grant  was  not  yet  secured,  although  strenuous  efforts 
had  been  made  to  obtain  it,  both  in  St.  Louis  and  along  the  line 
of  the  road.  The  amount  subscribed  by  the  counties  through 
which  the  road  was  to  extend  and  by  individuals  residing  in  these 
counties  and  in  St.  Louis  was  only  $369,000.^  The  company 
had  also  tried  without  success  to  negotiate  a  loan  of  four  million 
dollars,  based  upon  the  first-mortgage  bonds  of  this  branch  and  a 

'  Compilation  of  the  Laivs  in  Refe)-ence  to  such  Railroads,  etc.,  pp.  69-70. 

'^  Senate  Journal,  Adjourned  Session,  /Sjs,  p.  115- 

^  Ibid.,  pp.  28-31  ;  also  Appendix  i.  Table  i. 

■'/^/o'.,  p.  47.  '^  Ibid.  «/^?"a'.,  p.  48. 

">  Ibid.,  Appendix,  p.  49;  also  Appendix  i,  Table  ii. 


86  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

second  mortgage  on  the  main  line.'  The  contractors,  having 
subscribed  §100, 000  and  believing  that  the  deficit  would  be  made 
up,  began  work  June  I,  1855.  By  October  of  the  same  year  work 
was  in  progress  along  the  whole  line  of  the  first  division,  a  dis- 
tance about  eighty  miles  from  Franklin  on  the  main  line  ;  but 
although  a  great  amount  of  work  had  been  done,  no  payments 
had  been  made  to  the  contractors.^  Consequently  nothing  can 
be  said  regarding  the  cost  of  the  road  at  this  time. 

The  route  of  the  North  Missouri  Railroad  was  not  finally 
located  till  October  16,  1854. ^  The  route  of  this  road  also  was 
divided  for  purposes  of  construction  into  three  divisions  :  the 
first  extended  from  St.  Louis  to  St.  Charles,  a  distance  of  nine- 
teen miles,  the  second  from  St.  Charles  in  a  northwesterly  direc- 
tion to  a  junction  with  the  Hannibal  and  St.  Joseph  Railroad  in 
Macon  county,  147  miles,  and  the  third  from  this  junction  directly 
north  to  the  state  line,  a  distance  of  sixty-one  miles,  making  the 
whole  line  228  miles  in  length.  The  work  of  construction  was 
begun  on  the  first  division  about  the  first  of  June  1854,  and  the 
whole  of  this  division  was  opened  for  business  on  the  twentieth  of 
August  of  the  following  year. 

The  actual  cost  of  this  portion  of  the  completed  road  very 
greatly  exceeded  the  estimates  of  three  years  earlier.  This  divi- 
sion of  nineteen  miles  cost  very  nearly  one  million  dollars,  or  more 
than  $52,000  per  mile*  If,  however,  only  one-half  of  the  general 
expenses  up  to  date  be  charged  to  the  first  division,  the  cost 
per  mile  would  yet  be  more  than  §44,400  per  mile.  And  if 
then  the  total  discounts  on  the  bonds  to  date  ($44,148)  be 
deducted,  the  cost  per  mile  still  remains  about  $42,200.  This 
amount  is  in  striking  contrast  to  the  estimate  of  1852,  which  put 
the  whole  line,  supposed  then  to  be  250  miles  in  length,  at  five 
million  dollars  "completed  and  stocked,"  or  $20,000  per  mile. 5 
And  yet,  in  1855,  notwithstanding  the  great  cost  of  the  first  divi- 
sion, the  second  division,  between  St.  Charles  and  the  junction 

'  Western  Journal  and  Civilian,  vol.  x.  (June   1852)  p.  12.  ^  Ibid.,  p.  59. 

^Senate  Journal,  Adjourned  Session,  i8s5.  Appendix,  p.  49.  ■♦  Ibid.,  p.  66. 

^  Senate  Journal,  1833,  Appendix,  p.  29. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  87 

with  the  Hannibal  and  St.  Joseph,  was  estimated  to  cost  only 
$28,000  per  mile.  The  third  division,  however,  was  then 
estimated  at  the  high  figure  of  $51,724  per  mile.' 

The  funds  for  the  construction  of  the  first  division  of  the 
North  Missouri  as  in  the  case  of  the  Pacific  were  obtained  by 
disposing  of  a  portion  of  the  bonds  subscribed  by  the  county 
and  city  of  St.  Louis,  and  of  those  granted  by  the  state,  and 
from  payments  in  cash  by  individuals.'' 

The  Hannibal  and  St.  Joseph  Railroad  Company,  though  the 
first  to  be  incorporated,  was  very  tardy  in  beginning  the  actual 
work  of  construction.  Much  time  was  consumed  in  preliminary 
surveys,  and  the  route  was  not  finally  located  until  March,  1853; 
the  line  as  then  determined  was  206^  miles  in  length.^  In 
order  to  expedite  the  work  of  construction  the  route  was  divided 
into  eight  sections  of  about  twenty-five  miles  each,  and  the 
work  of  construction  was  begun  in  the  spring  of  1853.  By 
October  1855,  "the  first  four  divisions  on  the  eastern  portion  of 
the  line  were  under  construction  and  the  whole  of  the  first  division 
and  a  portion  of  the  second,  in  all  about  thirty  miles,  [was]  very 
nearly  ready  for  the  superstructure :  "  the  extreme  western  division 
was  also  under  construction.  Up  to  this  time,  however,  so  little 
had  been  accomplished  that  nothing  can  be  said  regarding  the 
actual  cost  of  the  road  per  mile.  But  it  is  to  be  observed  that 
the  original  estimates  made  by  the  chief  engineer  of  the  com- 
pany in  1853  were  at  this  time  increased  considerably  more  than 
one-third;  the  early  estimate  put  the  cost  of  the  whole  line 
including  stock  at  $4,655,200,  but  in  November,  1855,  this 
amount  was  raised  to  $6,268,700."  The  former  estimate  would 
make  the  road  cost  $23,000,  and  the  latter  about  $30,400,  per 
mile. 

Although  this  company  was  tardy  in  beginning  work,  it  was 
soon  to  make  greater  progress  than  any  of  the  others.  Eastern 
capitalists  had  become  interested  in  the  road,  and  had  already 
secured   a    controlling  interest   in    the    capital    stock.       Of    the 

'  Senate  Journal,  Adjourned  Session,  /Sjj,  Appendix,  p.  64. 

=  /did.,  p.  65  ;  also  Appendix  i.  Table  iv.  ^Ibid.,  p.  94.  *  Ibid.,  p.  98. 


88  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

$1,402,700'  subscribed  up  to  the  close  of  1855,  o^^^  million  dol- 
lars was  subscribed  by  individuals  in  Boston  and  New  York ; 
after  1853  a  majority  of  the  directors  of  this  company  were  non- 
residents of  Missouri.^  At  this  time  the  company  had  almost 
completed  the  surveys  of  the  land  granted  to  it  and  found  that 
the  amount  would  be  about  six  hundred  thousand  acres. ^ 
Although  no  portion  of  these  lands  had  been  sold,  they  would 
necessarily  be  in  demand  very  soon  because  they  lay  in  the  agri- 
cultural portion  of  the  state  which  was  being  occupied  very 
rapidly  through  immigration.  The  total  resources  ($2,802,700) 
of  this  company  in  1855,  exclusive  of  possible  receipts  from  land, 
bore  a  greater  relative  proportion  to  the  estimated  cost  of  the 
whole  line  of  its  road  than  did  the  resources  of  any  other  com- 
pany, excepting  those  of  the  St.  Louis  and  Iron  Mountain. 

The  route  of  the  St.  Louis  and  Iron  Mountain  Railroad  was 
finally  located  September  8,  1853;  the  line  extended  from  St. 
Louis  to  Pilot  Knob,  a  distance  of  eighty-six  miles.  The  work 
of  construction  was  begun  on  the  north  end  of  the  line  in  the 
fall  of  1853;  and  at  the  close  of  1855  it  was  expected  that  a  small 
portion  of  the  road  would  be  completed  within  a  few  months." 
A  large  portion  of  the  road  was  "  in  quite  an  advanced  condition," 
and  there  seemed  to  be  good  reason  to  expect  that  so  far  as  the 
means  of  the  company  would  permit,  it  would  "progress  rapidly 
towards  completion."  In  the  case  of  this  line,  as  in  the  ease  of 
others,  the  work  thus  far  completed  furnished  a  criterion  of  the 
probable  cost  of  the  road  sufficiently  definite  to  cause  the  offi- 
cers  of    the  company   to    increase    materially   the   estimates   of 

'This  amount  should  have  been  raised  to  1.5  million  dollars  before  the  company 
received  any  of  the  bonds  of  the  state  (Act  of  February  21, 185 1).  But  the  first  issue  of 
the  state  bonds  granted  was  made  December  28,  1853  {Senate  Journal,  Adjourned  Ses- 
sion, /(?5j,  Appendix,  p.  115),  or  nearly  two  years  prior  to  the  date  of  the  report  stating 
that  Si, 402, 700  was  the  total  amount  subscribed  {Ibid.,  p.  99).  Il  is  quite  probable, 
however,  that  the  state  was  misled  by  a  second  subscription  of  one  million  dollars 
stated  to  have  been  made  by  eastern  capitalists,  November  18,  1853  {Ibid.,  p.  96), 
something  more  than  a  month  prior  to  the  first  issue  of  bonds.  This  last  subscription 
was  never  entered  upon  the  books  of  the  company  {Ibid.,  p.  96). 

'^  Senate  Journal,  Adjourned  Session,  1833,  Appendix,  p.  96. 

'^Ibid.,  p.  97.  '■Ibid.,  p.  77. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  89 

former  years.  The  estimated  cost  of  this  road  of  eighty-six 
miles,  including  rolling  stock,  was  now  put  at  4.1  million  dollars, 
or  about  $47,600  per  mile.'  For  the  amount  of  work  to  be 
accomplished  in  order  to  secure  a  completed  road,  the  resources 
of  this  company  were  more  nearly  adequate  than  those  of  any 
other  road  aided  by  the  state.  The  total  resources  of  the  com- 
pany amounted  to  $2,993,300,  of  which  1.5  million  dollars  were 
in  the  bonds  of  the  state. ^ 

The  progress  of  construction  on  the  roads  aided  by  the  state 
at  the  close  of  1855  may  be  very  briefly  summarized. '  The 
Pacific  railroad  had  almost  reached  Jefferson  City,  and  had  con- 
sumed the  entire  amount  of  state  aid"  and  almost  all  the  city  and 
county  aid  received.  The  North  Missouri  Railroad  Company 
had  completed  the  first  division  of  its  line,  extending  from  St. 
Louis  to  St.  Charles,  and  had  commenced  a  second  division, 
extending  from  St.  Charles  to  a  junction  with  the  Hannibal  and 
St.  Joseph  ;  and  had  drawn  $600,000  of  the  state  grant.  The 
Hannibal  and  St.  Joseph  Company  had  something  over  one  hun- 
dred miles  in  process  of  construction,  but  no  j)art  was  completed  ; 
it  had  drawn  $580,000  of  the  state  bonds  granted.  The  St.  Louis 
and  Iron  Mountain  Company,  although  it  had  a  "  considerable  por- 
tion" of  its  road  under  construction,  had  completed  no  part  of  it ; 
of  the  state  grant  $400,000  had  been  received.  Taking  into 
consideration  the  length  of  time  that  had  elapsed  since  the  begin- 
ning of  the  work  of  construction  it  is  thus  seen  that  very  little 
had  been  accomplished.  Only  one  road,  the  Pacific,  had  really 
made  progress  at  a  rate  that  could  be  called  desirable,  and  this 
road  had  cost  twice  as  much  as  had  been  estimated  at  the  begin- 

"^ Senate  Journal,  Adjourned  Session,  fSsS,  Appendix,  p.  78. 
^  Ibid.,  p.  79  ;  also  Appendix  i.  Table  v. 


3 

Bonds  granted 

Amount  issued 

Amount  remaining 

Pacific   Railroad  Company 
South  West  Branch    - 

-     ^3,000,000 
1,000,000 
2,000,000 

$3,000,000 

Si, 000, 000 

North  Missouri 

600,000 

1,400,000 

Hannibal  and  St.  Joseph     - 

1,500,000 

580,000 

920,000 

St.  L.  and  Iron  Mountain 

1,500,000 

9,000,000 

400,000 

1,100,000 

4,580,000 

4,420,000 

*  Senate  Journal,  Adjourtied  Session,  i8j;3.  Appendix,  p.  115. 


90  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

ning  of  the  enterprise.  And,  as  has  been  seen,  the  cost  of  the 
work  on  all  of  the  other  roads  aided,  so  far  as  the  companies  had 
proceeded  with  the  construction,  had  already  demonstrated  that 
each  of  them  would  cost  from  30  to  lOO  per  cent,  more  than  was 
originally  estimated. 

§  5.  No  sooner  had  the  railroad  development  of  the  state 
been  fairly  begun,  than  the  anxiety  for  the  development  of  the 
iron  industry  of  the  state  began  greatly  to  increase.  The  sys- 
tem of  railroads  to  which  aid  was  granted,  amounted  to  nearly 
1 1 00  miles.  As  each  mile  required  one  hundred  tons  of  iron 
rails,  and  as  iron  cost  ^75  per  ton,  delivered  in  St.  Louis,  the  com- 
pleted system  would  demand  eight  million  dollars  worth  of  railroad 
iron.'  A  writer  of  the  time  asks  if  Missouri  shall  "carry  coals 
to  Newcastle  in  both  cases:"  .  .  .  "shall  the  money  of  Missouri 
be  sent  to  England  where  there  is  an  abundance  of  money,  and 
shall  the  iron  of  England  be  sent  to  America  where  there  is  an 
abundance  of  iron?"  And  further,  he  says,  "money  is  wanted 
in  Missouri,  and  so  great  is  the  demand  for  it  that  interest  twice 
as  high  as  the  law  allows  is  currently  given  for  its  use  ;  and  even 
three  times  more  than  the  legal  rate  is  not  an  uncommon  figure  ;  " 
and  again,  "how  can  these  eight  million  dollars  be  spared  from  the 
state,  when  the  want  of  money  is  three  times  greater  than  the  law 
assumes  that  it  should  be  ?  This  money  cannot  be  spared.  The 
want  of  it  added  to  the  present  want  would  paralyze  and  perhaps 
crush  the  mercantile  with  every  other  order  of  business,  and 
leave  our  railroad  system  like  the  roofless  frame  of  an  unfinished 
building."^  Such  mistaken  ideas  of  the  real  situation  is  what 
prevents  to  a  great  extent,  in  the  early  days  of  a  new  community, 
even  that  degree  of  development  of  which  the  community  is 
capable.  A  new  community  cannot  develop  all  its  resources  at 
once.      High  interest  was  paid   in    Missouri  at  this  time  because 

'The  statement  made  by  the  Western  Journal  and  Civilian  that  the  several  rail- 
ways aided  by  the  state  amounted  in  all  to  1200  miles  of  road  is  wide  of  the  mark 
about  100  miles;  and  therefore  its  estimate  of  nine  million  dollars  for  iron  is  too  large. 
—  Western  Journal  and  Civilian,  ix.  p.  381. 

^  Western  Journal  a?td  Civilian,  xi.  (March  1854)  p.  442. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  9 1 

of  the  great  risk  which  always  accompanies  investments  in  a 
comparatively  new  state  ;  the  writer  is  correct,  however,  in  urg- 
ing the  repeal  of  the  usury  law,  limiting  the  rate  of  interest. 
The  development  of  the  resources  of  any  state,  young  or  old,  is 
limited  by  the  amount  of  capital  obtainable  for  this  purpose,  and 
the  amount  of  capital  obtainable  is  limited  by  the  capacity  of 
the  community  to  furnish  the  collateral  demanded  by  those  who 
lend  monev.  Again,  the  quantity  of  money  in  a  state  has  usually 
nothing  whatever  to  do  with  the  amount  of  industry  being  carried 
on  in  that  state.  If  Missouri  had  bought  the  1 10,000  tons  of 
iron  needed,  from  Liverpool  or  Pittsburgh,  she  would  have  paid 
for  them  in  the  end  with  her  agricultural  and  mineral  products. 
The  demand  for  railroad  iron  simply  meant  an  additional  demand 
for  these  products.  So  the  question  for  Missouri  was  not  one  of 
the  quantity  of  money,  but  of  the  form  of  investment  for  the 
capital  then  obtainable  upon  the  resources  of  the  state.  If  an 
investment  in  the  manufacture  of  rails  would  have  furnished 
rails  cheaper  than  they  could  be  bought  at  Liverpool  or  Pitts- 
burgh with  the  products  of  the  farm  and  of  mines,  then  would  it 
have  been  best  for  the  people  of  the  state  to  engage  in  the  iron 
industry.  Yet  even  then  the  iron  industry  might  soon  have  gone 
to  the  wall  because  of  the  discovery  of  iron  mines  of  less  refrac- 
tory ores.  Indeed  during  the  preceding  year  the  senior  editor 
of  the  journal  which  was  at  this  time  advocating  iron  manufac- 
tures admitted,  with  some  spleen  however,  that  the  "iron  beds  of 
the  uninhabited  hyperborean  region  bordering  on  Lake  Superior 
.  ,  .  .  but  recently  made  known  to  civilized  men  .  .  .-.  were 
already  attracting  more  attention  than  those  of  Missouri."' 

§  6.  The  fact  that  the  cost  of  the  various  roads  was  so  much 
greater  than  at  first  estimated  resulted  in  an  impression  that  the 
state  funds  were  probably  not  being  applied  in  the  best  of  faith 
to  the  extension  of  the  roads  ;  this  impression  had  become  gen- 
eral early  in  the  year  1855.  It  was  also  quite  generally  felt  that 
the  roads  were  not  making  progress  at  a  sufficient  rate  of  speed. 

'  Western  Journal  and  Civilian,  ix.  (September  1853)  p.  381. 


92  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

Consequently  the  General  Assembly  passed  a  resolution  March  5, 
1855,  to  investigate  the  "work  and  management"  of  all  those 
companies  to  which  the  state  had  extended  aid.  The  work  of 
the  committee  appointed  under  this  resolution  was  very  thorough; 
it  undertook  "to  scrutinize  closely  the  acts  of  those  entrusted 
with  the  administration  of  the  affairs  of  the  railroad  companies 
for  the  purpose  of  ascertaining  whether  abuses  had  grown  up, 
and  whether  the  state  and  the  people  had  been  justly  dealt  with 
in  their  management;  whether  errors  had  been  committed,  and 
if  so,  by  whom  and  to  what  extent."'  The  railway  companies 
did  not  resent  the  investigation. 

The  Pacific  Railroad  at  this  time  engaged  by  far  the  largest 
amount  of  attention.  "  Because  of  the  greater  magnitude  of  its 
work  and  of  the  much  larger  expenditure  by  it  than  any  other, 
in  addition  to  other  causes,"  it  had  been  regarded  by  many  with 
more  suspicion  than  the  others.^  Although  the  location  of  the 
road  from  St.  Louis  to  Jefferson  City  had  been  the  cause  of  much 
dissatisfaction,  the  investigating  committee  were  convinced  that 
the  board  of  directors,  in  deciding  upon  the  route  selected,  were 
influenced  "only  by  proper  motives."  The  chief  matter  of  con- 
cern to  the  people  was  whether  or  not  the  company  had  not  paid 
exorbitant  prices  "to  the  contractors  for  work  to  be  by  them  sub- 
let at  greatly  reduced  prices,  the  difference  going  to  enrich  them 
and  to  impoverish  the  company."  3  From  the  "  History  of  Con- 
tracts ""  on  the  first  and  second  divisions  of  the  road  as  given  in 
the  report  of  the  committee,  and  stated  to  have  been  taken 
from  the  books  of  the  company,  it  appears  that  exorbitant 
prices  were  not  paid  to  contractors.  The  first  division  of 
thirty-seven  miles  was  divided  for  purposes  of  construction 
into  twenty-eight  sections,  and  each  section  was  let  to  a 
separate  contractor.  In  many  of  these  cases  the  contractors 
became  embarrassed  and  the  company  had  to  assume  the 
payment  of  workmen  in   order  to  insure   the  completion  of  the 

'  See  Report   of  the  Committee,  Senate  Adjourned  Session,   i8s5.  Appendix,  pp. 
3-123- 

'  Senate  Journal,  Adjourned  Session,  1 8^^,  Appendix,  p.  5- 
^ Ibid.,  p.  16.  '•Ibid.,  pp.  17-22. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  93 

work.  "The  contracts  on  the  first  division  were  let  when 
labor  was  cheap,"  and  when  contractors  had  had  "no  expe- 
rience ....  in  doing  work  in  Missouri."  Labor  increased  in 
price  during  the  period  of  construction  of  this  division  "from 
seventy-five  cents  to  one  dollar  and  twenty-five  cents  per  day. 
A  great  deal  of  sickness  prevailed  upon  the  line  most  of  the 
time.  The  cholera  made  its  appearance  nearlv  every  year  on 
almost  every  section.  Provisions  of  all  kinds  rose  to  very 
high  prices.  Material  was  found  more  difficult  of  excava- 
tion than  any  one  could  have  supposed.  All  of  these  diffi- 
culties combined  increased  the  cost  much  over  original  estimates." 
Although  the  work  upon  the  second  division,  from  Franklin 
to  Jefferson  City  was  let  in  larger  contracts  than  that  upon  the 
first  division,  it  was  difficult  to  get  labor  at  such  prices  as  would 
enable  the  contractors  to  do  the  work.  The  profits  of  the  con- 
tractors were  "very  small  —  inmost  cases  absolutely  nothing; 
in  a  few  instances,  8  or  lO  per  cent,  may  have  been  made." 
In  the  construction  of  the  second  division  there  was  a  repetition 
of  the  troubles  experienced  on  the  first,  "among  the  most  serious 
of  which  was  that  of  cholera."  Manv  deaths  "occurred  each 
season  from  this  cause,  which  of  course  delayed  the  work.  This 
coupled  with  the  want  of  ready  means  greatly  increased  the  cost 
of  the  work.  At  times  indeed  the  work  was  nearly  stopped  on 
this  account.  The  iron  for  the  first  division,  4000  tons,  cost, 
delivered  at  St.  Louis,  $45  per  ton.  For  the  second  division, 
the  8800  tons  cost  delivered  upon  the  line  about  $75  per  ton; 
all  was  English  iron  excepting  some  320  tons  from  Wheeling." 

In  addition  to  the  increased  cost  of  labor  and  materials, 
there  was  the  further  burden  of  the  greater  amount  of  interest  on 
state  bonds  to  be  paid.  A  greater  proportion  of  this  interest  than 
was  expected  had  to  be  paid  out  of  the  capital  instead  of  out  of  the 
earnings  of  the  road  because  of  the  delay  in  the  completion  of  the 
work.  The  additional  cost  of  larger  amounts  of  machinery  and 
rolling  stock  found  necessary  for  the  use  of  the  road  must  also 
be  added.  Another  element  to  be  considered  is  that  of  the  skill 
or  lack  of  skill  in  the  supervision  of  the  construction.     The  work 


94  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

on  the  Pacific  Railroad  had  been  managed  by  persons  "who, 
however  qualified  for  the  work  and  faithful  in  their  discharge  of 
it,  were  operating  in  a  new  field  under  novel  circumstances,  [and] 
ignorant  necessarily  of  the  material  to  be  dealt  with  in  the  work 
of  construction."  Taking  all  of  these  facts  into  consideration, 
the  committee  were  "constrained  to  think"  that,  though  the 
result  would  "still  show  a  large,  perhaps  a  too  greatly  increased 
cost,"  the  reasons  for  the  increase  would  be  apparent ;  and  that 
therefore  the  necessity  of  accounting  for  it  by  "  the  alternative  of 
wasteful  expenditure"'  would  be  obviated. 

The  North  Missouri  Railroad  Company  was  also  exonerated 
by  the  investigating  committee.  Although  the  first  division  of 
this  road  had  cost  about  one-third  more  than  at  first  estimated, 
the  investigations  of  the  committee  satisfied  them  that  all  the 
affairs  of  the  company  had  been  "conducted  faithfully,  skillfully, 
and  systematically."  =*  The  remaining  companies,  the  Hannibal 
and  St.  Joseph,  and  the  St.  Louis  and  Iron  Mountain,  it  will  be 
remembered,  had  not  up  to  this  time  completed  very  much 
work  ;  at  all  events,  they  had  not  completed  an  amount  sufficient 
to  furnish  the  basis  for  a  detailed  criticism. 

The  most  general  cause,  possibly,  for  a  greatly  increased  cost 
of  the  roads  arose  out  of  the  constant  and  urgent  demands  for 
funds.  The  securities  of  the  companies  to  a  great  e.xtent  had  to 
be  given  to  contractors  at  a  heavy  discount.  Means  had  to  be 
secured.  The  railway  builders  in  Missouri  found  out  that  in 
railway  building  at  least  "industry  is  limited  by  capital."  Since 
all  of  the  companies  were,  to  a  greater  or  less  extent,  limited  in 
the  amount  of  their  ready  funds,  it  became  necessary,  as  the  only 
way  of  securing  the  completion  of  their  roads  within  any  reason- 
able time,  to  call  in  the  aid  of  those  whose  means  or  credit  would 
enable  them  to  accept  in  payment  the  securities  the  companies 
could  give  to  them.  It  is  thus  seen  that  the  means  which  could 
be  treated  as  ready  cash  in  the  prosecution  of  the  work  could  be 
obtained  only  by  granting   liberal   discounts. ^     There   were  also 

^\^Senate Journal,  Adjourned  Session,  /8ss,  Appendix,  pp.  26-27. 
''Ibid.,  p.  64.  'iJbid.,  p.  114. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  95 

certain  smaller  items,  by  which  unexpected  expenses  had  been 
incurred.  On  the  general  subject  of  salaries  of  the  officers  of 
the  companies,  however,  the  committee  found  "nothing  to  con- 
demn." '  The  large  amounts  paid  out  as  engineering  expenses, 
which  had  been  the  cause  of  more  or  less  criticism,  the  commit- 
tee likewise  justified  ;  and  it  properly  added  that  just  in  propor- 
tion as  the  preliminary  and  subsequent  surveys  are  elaborate  and 
thorough  is  the  final  location  likely  to  be  the  best.  The  sums 
paid  for  land  damages  were  large  and  generally  in  excess  of  the 
estimates.  For  this,  however,  there  seemed  to  be  no  remedy 
except  in  cases  where  the  companies  were  able  "to  procure  a 
relinquishment  before  actual  location."^  Regarding  the  matter 
of  profits  and  contracts,  it  has  already  been  seen,  from  the 
records  of  the  companies,  that  the  contractors  did  not  make 
enormous  profits.  The  final  conviction  of  the  investigating 
committee  was,  however,  that  the  contractors  did  make  large 
profits.  They  regarded  the  "mode  of  constructing  railroads" 
which  then  prevailed  "with  all  the  companies  "  in  the  state, —  that 
is,  "the  plan  of  making  large  contracts  with  individuals  and 
firms," — not  the  best,  and  assigned  as  a  reason  that  "  probably  the 
average  profits  of  large  contractors  did  not  fall  below  1 5  or 
20  per  cent,  on  the  whole  work."  It  was  suggested  that  a 
part  of  this  amount  could  be  saved  by  letting  the  work  in  small 
contracts.  It  was  the  opinion  of  practical  men,  however,  that 
the  plan  of  large  contracts  which  prevailed  generally  throughout 
the  country  was  the  best.  The  committee  did  not  favor  the 
idea  of  requiring  the  companies.>to  publish  the  terms  made  to  the 
main  contractors,  for  the  reason  that  the  contractors  would  not 
be  able  "to  sublet  the  work  at  such  a  price  as  would  permit 
them  to  realize  a  just  profit,  or  indeed  any  profit  whatever."^ 

There  was  one  element,  however,  which  increased  the  cost  of 
railroad  construction  in  general  and  which  the  committee  did  not 
mention ;  this  was  the  tariff  duty  on  rolled  bar-iron.  This  duty 
has  been  reduced  considerably  by  the  act  of    1846    but   had  not 

^  Senate  Journal,  Adjourned  Session,  1833,  Appendix,  p.  ill. 
^  Ibid.  3  Ibid.,  p.  16. 


g6  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

been  wholly  wiped  out.     The  duty  left  on   iron   rails  by  this  act 
was   30   per   cent,   ad  valorem;^  and    the   removal  of  that    duty 
would  have   saved    millions  of   dollars   to   the   railroad  industry 
between    1846   and    1861.     The   condition    of  many  of  the  rail- 
roads in  1854  was,  however,  that  of  strained  borrowers  ;  and  this 
certainly    was    the    case    with     the    Pacific     railway,    the     most 
advanced  of  those    in    Missouri.     A  trustworthy   writer  says   in 
this  connection  that  "were  it  certain  that  by  abolishing  the  tariff 
duty,  the  price  of  rails  would   be  reduced   30   per  cent.,  still  but 
few  of  the  railroad  companies  of  this  country  would  be  in  a  better 
condition  than  they  are  at   present.     They  have   already  carried 
more  bonds  to  market  than  can  be  sold  ;  and  unless  they  resort 
to  the  common  sense  and   safe  method  of  building   railroads  by 
the   application    of  their   own    money  instead   of  relying  solely 
upon  the  sale  of  bonds  to  purchase  iron,  they  will  be  compelled 
to   suspend   operations  until    a  more   propitious   season."^     The 
committee,  in  conclusion,  notwithstanding  the  fact  that  ^4,580,- 
000  of  the  nine  million  dollars  already  granted  to  the  roads  in  the 
bonds  of  the  state  had  been  issued  to  them,  and  that  at  this  time 
(November   1855)  less   than  one  hundred  miles  of  railway  were 
in  operation,  expressed  the  hope  that,  in  some  way  by  which  the 
state   could  be   made  most   secure,  her   aid   might   be   given   to 
complete  the  various  roads  now  under  construction.^     The  work 
which   this   investigating   committee  did   was   the  kind  of  work 
which  should  have  been  done  by  a  Board  of  Public  Works,  had 
one  existed  at  the  time.      Certain  acts  granting  aid  to  the  Pacific 
and   to  the  St.   Louis  and   Iron   Mountain  roads   provided  for   a 
Board   of   Public  Works   for   these    roads  ;  but  the  work  of  this 
Board   did     not     extend  to   any  of  the    other  roads. t     It  must 
therefore  be  held  that  in  the   matter  of  looking   after  her  inter- 
ests in  the  great  railway   undertaking  into  which  she   had    now 
entered  the  state  of  Missouri  signally  failed    in  providing  the 
necessary  safeguards  in  the  form  of  a  competent  Commission  or 

■Taussig,  Tariff  History  of  the  United  States,  p.  125. 
'^  Western  Journal  and  Civilian,  xii.  (March  1854),  p.  81. 
'^  Senate  Journal,  Adjourned  Session,  185s,  Appendix,  p.  123. 
'■Ibid.,  pp.  161  and  163. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  97 

Board  of  Public  Works.  An  excellent  system  had  been  devised 
for  securing  annual  reports  to  the  General  Assembly  from  the 
several  companies  ;  but  up  to  this  time,  nearly  five  years  after 
the  experiment  of  aiding  railroads  had  been  begun,  the  state 
had  no  central  authority  to  which  these  various  reports  were  to 
be  submitted.  The  board  which  existed,  recognizing  plainly 
their  limitations,  stated  that  "to  enable  a  Board  of  Public  Works 
to  discharge  their  duty  properly  to  the  state  and  other  parties 
interested,  there  should  be  associated  with  them  an  intelligent 
[and]  practical  engineer;  and  a  board  thus  constituted  should 
have  their  powers  and  duties  clearly  defined  by  the  legislature." 
It  was  also  the  opinion  of  the  board  that  "  had  this  policy  been 
adopted  at  the  commencement  of  the  system,"  some  of  the 
errors,  which  had  been  committed,  would  probably  have  been 
avoided  and  a  considerable  sum  thereby  saved  to  the  state  and 
to  the  stockholders.^  The  legislature  did  not,  however,  exercise 
a  jealous  care  over  the  interests  of  the  state.  Already  indeed 
the  way  was  being  paved  for  a  new  grant  of  aid  larger  than  all 
the  previous  grants  combined. 

§7.  The  House  Committee  on  Internal  Improvements,  "see- 
ing that  the  railroads  had  not  progressed  as  rapidly  as  had  been 
expected,"  thought  "some  means  must  be  devised  to  help  them." 
The  capital  necessary  for  the  construction  of  the  roads  "not 
being  available  in  the  state,"  a  large  portion  of  it  had  to  be 
"borrowed  from  the  accumulation  of  foreign  wealth."  And  a 
"little  examination  showed  the  committee  that  the  source  of 
difficulty  in  borrowing  capital  was  in  the  lien  held  by  the  state 
on  the  different  roads,"  a  lien  which  "necessarily  retarded  the 
negotiations  of  loans  abroad."^  Therefore  the  committee  recom- 
mended that  the  "priority  of  the  lien  of  the  state  should  be  on 
the  private  stock  and  not  on  the  road  itself,  that  the  road  itself 
so  fast  as  built  should  be  used  as  a  credit  on  which  to  borrow 
money  from  abroad;"^  and  a  bill  was  presented  to  the  legis- 

^  Senate  Journal,  Adjourned  Session,  i8s5,  ^^^Q^A^y^,  \>-  161. 

*See  Majority  and  Minority  Report,  House  Journal,  /Sjj,  Appendix,  p.  391. 


98  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

lature  embodying  these  suggestions.  But  the  priority  of  the 
state's  lien  was  not  set  aside  at  this  session  of  the  legislature. 
There  is  seen  here,  however,  the  genesis  of  the  idea,  that  a  second 
lien  was  good  enough  for  the  state  —  the  one  party  which  so 
far  had  been  an  efficient  source  of  help.  It  is  the  same  form 
of  proceeding  that  prevailed  later  but  on  a  much  greater  scale 
in  connection  with  our  transcontinental  Pacific  railways.  Analyzed 
as  a  borrowing  transaction,  the  securing  of  a  loan  by  means  of 
the  stock  of  a  company  is  an  attempt  to  make  one  credit  suffice 
for  two  debits,  or,  in  the  form  suggested  by  the  internal 
improvement  committee  of  the  Missouri  legislature,  it  is  an 
attempt  to  make  one  liability  serve  as  a  resource,  against  which 
another  liability  may  be  incurred.  The  private  stock  of  the 
company  was  already  a  liability.  To  use  this  as  the  basis  for 
securing  the  state  bonds,  another  liability,  was  to  attempt  to  turn 
one  liability  into  a  resource.  It  is  an  attempt  to  juggle  at  book- 
keeping. The  debits  here  represent  amounts  loaned  by  creditors, 
and  such  bookkeeping  would  necessarily  result  in  leaving  one  of 
the  creditors  unrecompensed  in  the  end. 

It  has  been  seen  thus  far  (i)  that  up  to  the  close  of  the  year 
1855  a  much  smaller  amount  of  work  had  been  accomplished 
than  the  railway  companies  had  expected  to  accomplish,  and  (2) 
that  this  amount  had  cost  much  more  than  was  at  first  estimated, 
proving  that  the  cost  of  the  completed  system  would  exceed  by 
many  millions  the  original  estimates.  However,  the  state  now 
began  to  feel  that  her  own  destiny  depended  in  a  larger  measure 
than  ever  upon  the  completion  of  the  several  railways.  Indeed 
failure  now  would  reflect  upon  the  honor  of  the  state,  to  say 
nothing  of  the  financial  loss.  And  to  the  end  that  success  might 
finally  come,  it  was  publicly  advocated  that  the  state  should  sac- 
rifice the  first  lien  held  on  the  railways  so  that  the  companies 
might  go  into  the  market  with  their  own  first-mortgage  bonds.' 
We  have  seen,  however,  that  the  companies  were  already  bor- 
rowing to  excess.  The  state  therefore  for  the  time  being  very 
wisely  held  to  her  decision  not  to  release  her  first  lien. 

'  Western  Journal  and  Civilian,  xiv.  (1855).  P-  297. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  99 

§  8.  Although  appeals  in  the  form  of  memorials  to  the  legis- 
lature were  not  at  this  time  made  by  the  several  companies,  they 
were  all  very  solicitous  of  obtaining  whatever  aid  the  state  might 
grant.  The  general  feeling  throughout  the  state  seems  to  have 
been  that  more  help  should  be  given  to  the  railways  ;  and  this 
feeling  led  to  a  further  grant  of  bonds.  In  this,  the  second 
period  of  grants,  the  climax  of  the  aiding  policy  was  reached. 
The  legislation  of  the  year  1855  bound  the  state  for  an  amount 
larger  than  the  total  of  all  the  previous  grants,  the  sum  of  bonds 
granted  and  guaranteed,  amounting  to  eleven  million  dollars. 
Most  of  this  bounty  was  the  result  of  one  act,  December  10,  1855.' 
The  reasons  for  this  act  as  given  in  a  preamble  were,  (i)  that  the 
roads  might  be  completed  as  soon  as  possible  and  (2)  that  the 
first  lien  of  the  state  prevented  the  companies  from  negotiating 
loans  on  their  own  account.  It  was  also  provided  in  the  early 
part  of  the  year  that  all  bonds  could  be  sold  at  their  "  real 
market  value."  That  the  state  had  very  great  confidence  in  the 
success  of  the  enterprises  is  also  further  shown  in  the  act  of 
December  10,  by  its  changing  the  proportion  of  aid  granted  to 
the  amount  of  private  funds  expended.  The  former  policy  of 
granting  one  dollar  of  aid  for  one  dollar  of  private  funds  spent 
was  changed  to  that  of  granting  two  dollars  of  aid  for  one  of 
private  funds  spent.  The  interest  relief  act  of  December  7, 
1855,  which  established  a  fund"  for  the  payment  of  interest  for 
the  companies  in  case  any  of  them  should  default,  is  indicative 
of  the  confidence  of  the  state  in  the  ultimate  success  of  her  plan  ; 
but  on  the  other  hand,  it  is  also  indicative  of  a  lack  of  confidence 
on  her  part  in  the  immediate  success  of  the  companies. 

In  addition  to  the  almost  excessive  confidence  exhibited  in 
the  legislation  of  1855  there  was  also  exhibited  in  more  than 
one  instance  a  certain  lack  of  business  sense.  When  a  state 
enters  into  industrial  undertakings  it  must  exercise  the  same  busi- 

'  Compilation  of  the  Lazvs  in  Reference  to  such  Railroads  as  have  received  aid  frovi 
the  State,  p.  73. 

-This  fund  consisted  of  ^200,000  appropriated  at  once  (fund  to  be  formally  con- 
stituted July  I,  1856)  and  $100,000  to  be  appropriated  annually  for  a  period  of  thirteen 
years. 


100  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

ness  sagacity  and  caution  that  are  demanded  of  private  indi- 
viduals and  corporations.  An  act  of  Marcii  3  reduced  the 
subscription  to  the  capital  stock  of  the  South  West  Branch 
necessary  to  secure  an  issue  of  the  state  bonds  from  ^500,000  to 
$300,000.'  An  act^  earlier  in  the  year  dispensed  with  the 
$50,000  block  feature,  rendering  it  easier  to  secure  the  bonds  of 
the  state.  Moreover  the  whole  grant  of  bonds  in  December  1855 
(ten  million  dollars)  was  made  in  the  full  knowledge  of  the 
report,  already  mentioned,  of  a  special  committee  appointed  to 
investigate  the  condition  of  the  railroads  of  the  state.  In  this 
report, 3  in  addition  to  what  has  already  been  stated,  the  legisla- 
ture was  informed  that  "  the  boards  which  have  conducted  the 
affairs  of  the  various  companies  have  been  composed  in  a  large 
part  necessarily  of  those  who  have  no  experience  in  these  mat- 
ters." Further  evidence  of  weakness  on  the  part  of  the  state 
will  be  seen  as  we  progress  with  our  study.  So  far  the  weakness 
is  that  of  indefiniteness  of  policy  and  lack  of  caution.  The 
whole  trend  of  the  legislation  of  1855,  viewed  from  a  business 
standpoint,  was  to  diminish  the  security  offered  by  the  roads  to 
the  state  for  the  bonds  loaned  to  them. 

The  act  of  December  10,  1855,  granting  and  "  guaranteeing  " 
in  all  ten  million  dollars  of  aid  to  the  several  railroad  companies, 
was  truly  a  product  of  the  times.  Although  it  marked  the  cli- 
max of  the  experiment  of  aiding  railway  construction  in  Mis- 
souri, it  was  only  the  advance  wave  of  the  tide  of  speculation 
which  in  the  country  at  large  was  to  reach  its  flood  level  more 
than  a  year  later.     A  glance  at  the  appended  table,*  showing  the 

'  Compilation  of  the  Laws  in  Reference  to  suck  Railroads  etc.,  p.  71. 
"^  Ibid.,  p.  69. 

^  Senate  Jou}-}tal,  Adjourned  Session,  /(?jj,  Appendix,  pp.  3-123. 

4  Number  of  companies                                                        Year  Total  capital  stock 

17              -              -              -              -    Jan.  23  to  Feb.  6,   1837  $7,875,000 

2       -              -              -              -                                            1838-9  2,800,000 

None        -  -  .  .  1840-1  

None-  -  -  -  1842-3  

None        -  .  -  .  1844-5  

I        -             -             -             -                                          1846-7  2,000,000 

Amount  carried  forward                -              -              -              .              .  12,675,000 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  101 

sum  total  of  the  capital  stock  of  the  railroad  companies  incor- 
porated at  the  respective  sessions  of  the  legislature,  from  1836 
to  1861,  will  show  clearly  that  the  railroad  activity  of  1855,  and 
the  state  grant  of  the  same  year,  were  but  special  cases  of  the 
unsound  speculation  then  rife  throughout  the  country,  and  which 
resulted  in  the  panic  of    1857. 

The  most  encouraging  feature  of  the  act  of  December  10, 
1855,  was  that  in  which  provision  was  made  for  a  general  board 
of  public  works  ;  this  board  was  to  consist  of  three  members 
elected  by  the  voters  of  the  state,  and  holding  office  for  four 
years.  The  board  was  to  inquire  into  the  construction  and  man- 
agement of  the  railways  aided  by  the  state  and  report  to  the 
governor  "not  less  than  once  a  year;"  for  this  purpose  they 
were  to  "  have  access  to  the  books  and  papers  "  of  the  com- 
panies. The  board  was  also  permitted  to  call  to  their  aid  a  com- 
petent engineer. 

A  less  encouraging  feature  of  this  act  was  the  attempt  made 
in  it  to  provide  for  a  sinking  fund  for  the  purpose  of  redeeming 
the  bonds  of  the  state  issued  to  the  various  railway  companies. 
The  act  provides  that  in  addition  to  the  provisions  already  made 
for  the  payment  of  the  interest  and  the  principal  of  the  bonds 
of  the  state  by  the  several  companies,  each  company  shall  pay 
to  the  treasurer  of  the  state  "  i  ^  per  cent,  in  each  year  on 
each  thirty-year  bond,  and  23^  per  cent,  in  each  year 
on  each  twenty-year  bond  ....  sold  or  hypotheca- 
ted."    The    first  year's  payment   was    to    be  made  within  sixty 

Number  of  companies                                                       Year  Total  capital  stock 

Amount  brought  forward  -----  ;jSi2,675,ooo 

6  -  -  -  -  1848-9  17,130,000 
8  -  -  -  -  1850-1  16,800,000 
8             -             -             -             -                                     1852-3  16,600,000 

7  -  -  -  -  1854-5  16,050,000 
12  -  -  -  -(adjourned  session)i855  16,250,000 
19        -             -             -             -                                          1856-7             57,300,000 

4  -  -  -  -  (adjourned  session)  1857  24,000,000 

5  -  -  -  -  1858-9  6,850,000 
14             -             -             -             -  (adjourned  session)i859-6o           35,450,000 

I        -  -  -  -  1860-1  2,500,000 


102  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

days  after  the  sale  or  hypothecation  of  the  bonds.  The  com- 
panies were  also  to  pay  to  the  treasurer  of  the  state  "  not  less 
than  10  per  cent,  per  annum  upon  the  net  earnings  "  of  their 
roads  after  completion.  These  sums  were  to  be  invested  at  not 
less  than  7  per  cent,  to  constitute  a  sinking  fund  for  the  pur- 
poses just  stated.  For  the  companies  this  provision  simply 
meant  that  the  state  would  charge  them  higher  rates  of  interest 
for  the  loans  advanced  ;  it  meant  that  the  thirty-year  bonds 
would  now  cost  the  companies  71^  per  cent.,  and  the  twenty- 
year  bonds  85^  per  cent,  annually,  instead  of  6  as  heretofore. 
The  untimeliness  of  such  a  requirement  becomes  obvious  if  one 
keeps  in  mind  the  financial  condition  of  the  companies  at  this 
period  ;  at  this  very  time  they  were  not  able  to  provide  private 
funds  at  the  rate  of  one  dollar  for  each  dollar  of  aid  granted  by 
the  state,  and  had  accordingly  been  compelled  to  ask  the  state 
to  grant  two  dollars  of  aid  for  each  dollar  of  private  funds 
spent.  The  ineffectiveness  of  the  sinking-fund  provision  was 
demonstrated  in  less  than  a  year  after  the  passing  of  the  act. 

§  9.  The  work  of  construction  during  the  last  months  of 
1 85 5  and  the  year  1856  was  carried  on  against  severe  odds. 
The  Pacific  Railroad  Company  had  a  large  floating  debt  when  the 
act  of  December  1855  was  passed  ;  consequently  the  greater 
part  of  that  grant  was  used  in  liquidating  this  debt.'  The  bonds 
disposed  of  for  this  purpose,  ;^  1,695, 000,  were  sold  at  a  discount 
of  from  14  to  16^  per  cent.;  so  that  the  shrinkage  on  the 
whole  was  $253,826.^  Of  the  $600,000  of  "  land  "  bonds  which 
the  company  issued  July  i,  1856,  and  secured  by  a  mortgage  on 
the  126,000  acres  of  its  land,  only  a  few  could  be  sold  because 
of  the  "condition  of  the  money  market."'  November  i, 
1855,  the  hastily  constructed  bridge  over  the  Gasconade  River 
succumbed  under  the  weight  of  a  heavy-laden  excursion  train  ; 
thirty-one  persons  were  killed  and  a  heavy  financial  loss  was 
sustained  by  the  company. 3     Although,  by  means  of  the  receipts 

'  House  Journal,  1836-7,  Appendix,  p.  394.  ==  Ibid.,  p.  282. 

^  Senate  Journal,  1867,  Appendix,  p.  876. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  IO3 

just  mentioned,  and  some  small  receipts  from  other  sources,  the 
company  had  been  able  to  put  the  road  in  good  running  order 
as  far  as  opened,  supplying  the  necessary  rolling  stock  and  main- 
taining its  credit,  it  was  compelled  to  confine  its  advanced  work 
to  the  first  forty  miles  west  of  Jefferson  City. 

The  company  appealed  strongly  for  more  aid,  alleging  that 
the  earnings  of  the  road  when  opened  to  Warrensburg  (Johnson 
county),  "would  pay  a  good  interest  on  the  expenditures,  [and] 
protect  the  state  against  loss."  The  company  asked  that  the 
remaining  1.3  million  dollarsof  the  grant  of  December  10,  1855,  be 
issued  upon  terms  less  rigid  than  those  of  the  act  granting  it, 
and  that  two  million  dollars  additional  in  the  bonds  of  the  state  be 
granted.'  Of  the  five  million  dollars  estimated  as  necessary  for  the 
completion  of  the  road  the  company  had  now  only  the  1.3  mil- 
lion dollars  in  the  bonds  of  the  state  already  granted  (which 
could  not  be  drawn  until  half  of  that  amount  was  spent  by  the 
company),  $650,000  in  subscriptions  west  of  Jefferson  City, 
and  its  own  "land"  bonds,  which  could  not  be  sold.^  Such  was 
the  financial  condition  of  the  most  advanced  road  in  the  state 
at  the  close  of  1856. 

On  the  South  West  Branch  the  work  of  construction  had 
been  carried  forward  by  the  contractors,  even  though  the  com- 
pany could  not  raise  the  funds  to  pay  them.3  No  bonds  of  the 
company  had  as  yet  been  sold.  Capitalists  would  not  purchase 
them  because  the  "only  security  for  the  bonds  was  the  mortgage 
on  the  road  and  the  lands  belonging  to  it;  the  road  had  yet  to 
be  built  and  the  failure  to  build  the  road  forfeited  the  title  to 
the  land."  So  the  risk  was  "too  great"  for  buyers  of  bonds;'* 
and  the  company  could  see  no  relief  except  in  further  help  from 
the  state. 

The  Hannibal  and  St.  Joseph  Railroad  Company,  although 
having  done  but  little  as  yet  in  the  matter  of  construction,  had 
succeeded  in  raising  its  available  and  prospective  resources  to  an 
amount   which    assured    the    "speedy    completion    of    the  road 

^  House  Journal,  18^6-7,  Appendix,  p.  395. 

^Ibid.,  p.  397.  ^Ibid.,  p.  398.  Wbid.,  p.  399. 


J 


104  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

beyond  any  probable  contingency."  '  The  state's  grants  to  this 
company,  in  all,  three  million  dollars,  had  been  sold;  private  sub- 
scriptions had  been  paid  to  the  amount  of  ^1,393,800;  and  the 
mortgage  bonds  of  the  company  to  the  extent  of  four  million 
dollars  had  been  negotiated.  This  would  make  the  whole 
resources  of  the  company  ;88,393,8oo.^  Of  course  large  deduc- 
tions must  be  made  from  this  amount  for  discounts. ^  The  first 
division  of  twenty-five  miles  west  from  Hannibal  was  completed 
and  the  work  of  laying  the  track  on  the  second  division  was 
begun  at  the  close  of  1856.  The  first  division  east  from  St.  Joseph 
was  nearly  completed  and  the  grading  was  in  a  "good  state  of 
progress  on  all  the  interior  divisions."  Iron  rails  and  locomotives 
were  now  being  delivered  at  both  ends  of  the  road.* 

On  the  St.  Louis  and  Iron  Mountain  the  work  of  construction 
had  progressed  much  more  rapidly  than  in  the  three  years 
preceding.  Although  only  twelve  miles  of  track  south  from  St. 
Louis  were  now  laid,  the  company  hoped  to  have  the  entire  road 
to  Pilot  Knob  ready  for  the  cars  during  the  summer  of  1857. 
To  do  this,  however,  the  company  felt  compelled  to  ask  further 
help  from  the  state  to  the  extent  of  $970,000.  The  company 
was  very  hopeful  of  a  large  business  from  the  region  of  Pilot 
Knob  and  Iron  Mountain,  alleging  that  the  freight  alone  to  be 
furnished  by  the  great  iron  and  mineral  beds  in  that  region  would 
pay  a  good  dividend  upon  the  cost  of  the  road  and  secure  the 
prompt  payment  of  the  interest  on  the  bonds  of  the  state.  The 
company  thought,  however,  that  in  case  the  road  should  be 
completed  to  the  Arkansas  state  line  a  further  sum  of  2.3  million 
dollars  in  the  bonds  of  the  state  would  be  necessary. 5 

The  North  Missouri  Railroad  Company  was  pressing  forward 
the  work  of  construction  on  the  second  division  (146  miles), 
between  St.  Charles  and  Macon  City,  their  point  of  junction 
with  the  Hannibal  and  St.  Joseph  road.  Only  one  million  dollars, 
of  the  grant  of  December  10,  1855,  was  applicable  to  the  construc- 

^  House  Journal,  1836-7,  Appendix,  p.  404.  "Ibid.,  pp.   310  and  411. 

3  See  Tables,  Appendix  i. 

^  House  Journal,  1836-7,  Appendix,  p.  413.  "^  Ibid.,  pp.  415-422. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID 


105 


tion  of  that  part  of  the  road  north  of  the  Hannibal  and  St. 
Joseph,  and  the  company  thought  they  would  need  more  aid 
from  the  state  to  complete  that  portion.' 


§  10.  It  is  thus  very  plain  that  at  the  close  of  1856  all  of  the 
companies  in  the  state,  with  the  single  exception  of  the  Hannibal 
and  St.  Joseph,  were  sorely  pressed  for  funds.  Further  evidence 
of  this  is  seen  in  the  fact  that  none  of  the  companies,  except  the 
Hannibal  and  St.  Joseph,  had  complied  with  the  sinking-fund 
requirement  of  the  law  of  December  10,  1855.^  Such  was  the 
conditions  of  the  companies  ;  and  yet  the  people  of  the  state 
were  very  anxious  that  the  roads  be  completed  at  an  early  date. 
Taking  these  facts  in  connection  with  the  further  fact  that  a 
spirit  of  speculation  was  general  throughout  the  country,  we  have 
the  causes  which  led  March  3,  1857  to  the  passage  of  the  fourth 
and  last  important  act  granting  aid  to  the  railroad  companies. ^ 
This  act  was  passed  notwithstanding  the  fact  that  the  state  was 
now  bound  to  the  extent  of  $19,250,000,'*  only  one-half  of  which 
had  been  issued  to  the  companies,  and  that  less  than  300  miles 
of  track  had    been    laid. 5     Furthermore,    this  act  was  passed    in 

^  House  Journal,  1856-7,  Appendix,  p.  361.  ^  Ibid.,^.  253. 

3  Conipilation  of  the  Laws  in  Reference  to  such  Railroads  etc.,  p.  89. 


To  the  Pacific  R.  R.  and  S.  W.  B. 
"       Hannibal  and  St.  Joseph     - 
"       North  Missouri 
"       St.  L.  and  Iron  Mountain  - 
"       Cairo  and  Fulton  - 


Authorized 
$9,000,000 
3,000,000 
4,000,000 

3,000,000 
250,000 


Issued 
$4,900,000 
1,500,000 
2,240,000 

993>ooo 


Balanced 
$4,100,000 
1,500,000 
1,760,000 
2,007,000 
250,000 


19,250,000  9,633,000  9,617,000 

See  Auditor's  Report,  October  i,  1856,  Senate  Journal,  1856-7,  Appendix,  p.  30. 


On  the  Hannibal  and  St.  Joseph 
"       North  Missouri 
"       St.  L.  and  I.  M. 
"       Pacific 

"       Pacific  (S.  W.  B.)     - 
"       Cairo  and  Fulton 


Miles  of  track  laid 
November  1857  January  1859 

64 

-     75 
46 


132 


170 

168.75 
86.50 

163.00 

19.00 

7.00 


Total 


317 


614.25 


I06  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

opposition  to  the  recommendations  of  the  minority  of  the  Internal 
Improvement  committees  of  the  House  and  Senate,  who  objected 
to  the  present  plan  of  granting  aid  and  recommended  that  the 
state  ought  not  to  depart  from  the  original  terms  and  con- 
ditions of  granting  aid  —  that  is,  one  dollar  of  aid  for  one  of 
private  funds  spent.' 

This  act  granted  in  all  the  further  sum  of  5.7  million  dollars,^ 
to  six  companies  ;  in  it  the  plan  of  granting  two  dollars  of  aid 
for  one  dollar  of  private  funds  spent  —  a  plan  which  had  not 
been  followed  since  December  10,  1855 — was,  with  certain 
exceptions,  continued.  Exceptions  were  made  in  favor  of  the 
Pacific,  the  South  West  Branch,  the  St.  Louis  and  Iron  Mountain, 
and  the  North  Missouri  Railroads.  Of  the  1.3  million  dollars, 
yet  due  to  the  Pacific  by  virtue  of  the  act  of  December  1855, 
the  company  was  allowed  to  draw  one  million  dollars  on  proof 
of  having  expended  ^500,000  west  of  Jefferson  City,  although 
a  part  of  this  expenditure  had  come  from  the  proceeds  of  state 
bonds.  The  1.5  million  dollars  granted  by  this  act  of  the  North 
Missouri  Company  for  the  purpose  of  completing  their  road  to 
the  junction  with  the  Hannibal  and  St.  Joseph  was  to  be  granted 
in  blocks  of  $200,000  each,  a  block  to  be  made  over  as  often  as 
the  company  spent,  not  from  private  funds  but  from  all  funds, 
the  sum  of  $200,000  in  the  construction  of  their  road.  As  the 
state  bonds  were  now  selling  at  about  15  per  cent,  discount  the 
company  would  be  under  obligations  to  raise  only  about  i  5  per 
cent,  of  their  expenditures  in  order  to  draw  the  bonds  of  the 
state.  Similar  privileges  were  granted  the  St.  Louis  and  Iron 
Mountain  concerning  the  expenditures  necessary  to  extend  the 
road  to  Pilot  Knob.     South  of  Pilot  Knob,  however,  the  addi- 

^  House  Journal,  1836-7,  Appendix,  p.  360. 

'^  To  the  Pacific      -------  ^1,000,000 

"        South  West  Branch  -----  1,500,000 

"        North  Missouri     -             -             -             - ,           -             -  1,500,000 

"        St.  L.  and  I.  M.          -              -              -              -              -  600,000 

"        Platte  County        ------  700,000 

"        Cairo  and  Fulton       -----  400,000 


^5,700,000 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  10/ 

tional  grant  of  $600,000  was  to  be  issued  only  upon  proof  of 
the  expenditure  of  half  that  amount  in  the  private  funds  of  the 
company.  Furthermore  the  governor  was  to  issue  bonds  to  the 
Pacific  (including  the  South  West  Branch) ,  the  St.  Louis  and  Iron 
Mountain  and  the  North  Missouri  Companies,  to  any  amount 
within  the  limit  of  the  various  grants,  if  the  companies  deemed 
it  desirable  in  order  "to  take  advantage  of  a  favorable  money 
market."  At  this  time  the  Platte  County  and  the  Cairo  and 
Fulton  Railroad  Companies  received  their  first  and  only  grants 
of  aid,  the  former  $700,000  and  the  latter  $400,000.  The  terms 
of  these  grants  were  "two  dollars  of  aid  to  one  of  private  funds 
spent." 

In  addition  to  the  concessions  made  to  most  of  the  companies 
in  the  matter  of  drawing  the  bonds  of  the  state,  this  act  contains 
further  evidence  that  the  finances  of  the  companies  were  inade- 
quate to  their  various  needs.  The  sinking  fund  provision  of  the 
act  of  December  10,  1855  was  suspended  till  the  first  of  January 
1859.  The  act  also  provided  that  in  case  any  of  the  companies 
failed  to  pay  any  part  of  the  interest  or  principal  of  any  of  the 
bonds  granted  to  them  they  could  not  receive  any  further  issue 
of  bonds. 

Taking  into  consideration  the  exceptions  made  to  the  policy 
of  granting  two  dollars  of  aid  for  one  of  private  funds  spent, 
the  low  price  of  the  state  bonds,  the  slow  progress  of  the  com- 
panies, and  the  greatly  increased  cost  of  the  roads,  the  act  of 
March  3,  1857  can  be  regarded  only  as  a  phenomenon  of  the 
speculative  intoxication  of  the  times. 

§  II.  All  industrial  enterprises  in  Missouri  of  course  suffered 
like  those  of  the  country  in  general  in  1857.  Very  little  progress 
was  made  during  this  year  on  any  of  the  railways  which  had 
recently  been  so  greatly  favored  by  the  state.  Up  to  November 
of  this  year  only  3 1 7  miles  of  track  were  laid,'  making  only  a  little 
more  than  100  miles  for  this  year.  The  bonds  of  the  state  had 
fallen  rapidly  during  the  year;   in  March  they  sold  in  New  York 

'  See  above,  note  (5)  p.  105. 


I08  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

at  83,  and  before  the  close  of  the  year  they  sold  as  low  as  65.' 
During  the  year  ending  November  1857,  $6,347,000  in  bonds 
had  been  issued  to  the  companies  and  most  of  them  had  been 
disposed  of  at  these  ruinous  rates.*  Such  was  of  course  the  legit- 
imate result  of  the  policy  followed  by  the  state  in  granting  aid 
when  the  railroad  companies  possessed  so  little  private  capital  to 
serve  as  security.  However,  in  Missouri  at  this  time,  it  was 
thought  that  one  of  the  chief  causes  of  the  crisis  of  1857  was 
the  unsound  banking  system  of  the  country.  But  in  this  connec- 
tion it  should  also  be  observed  that  Missouri  was  to  some  extent 
responsible  for  the  existence  of  this  system. 

§  12.  So  great  was  the  effect  of  the  revulsion  of  1857  upon 
the  railroad  enterprises  of  the  state  and  so  keenly  did  the  people 
of  Missouri  feel  the  deterioration  of  the  credit  of  the  state  that 
the  governor  called  an  extra  session  of  the  legislature  to  meet 
in  October.  In  the  mind  of  the  governor,  three  duties  confronted 
this  legislature  :  (i)  to  take  such  judicious  and  decisive  measures 
as  would  secure  beyond  all  question  the  honor  and  credit  of  the 
state  ;  (2)  to  devise  such  means  of  assisting  the  railways  as  would 
enable  the  companies  to  secure  what  had  been  accomplished  and 
ultimately  to  complete  the  roads  ;  and  (3)  to  place  such  addi- 
tional guards  upon  the  banking  system  as  would  confine  it  within 
legitimate  limits  and  tend  to  expel  from  the  state  all  depreciated 
paper.3  The  urgency  of  the  situation  was  appreciated  by  all 
and  in  a  short  time  an  act  was  passed  (November  19,  1857) 
restricting  the  issues  of  state  bonds  and  making  provisions  for 
an  interest  fund  by  a  light  tax  levy  and  by  other  means.  At 
the    beginning  of  this   session  (October    1857)    there   were   yet 

'"  The  lowest  rates  at  which  bonds  have  been  sold  .  .  .  are  69^4  by  the  Iron 
Mountain  Company,  67^  by  the  North  Missouri  Company,  65  by  the  Pacific,  and  80 
by  the  Cairo  and  Fulton." — Report  of  Board  of  Public  Works,  House  Journal, 
Adjourned  Session,  /8s7,  Appendix,  p.  3. 

"See  Auditor's  Report,  October  i,  1856,  Senate  Journal  iSs^-y  ;  Senate  Journal 
1856-7,  Appendix,  p.  30,  and  House  Journal,  Adjourned  Session,  1837,  Appendix,  pp. 
3  and  7. 

'^  House  Journal,  Adjourned  Session,  1857,  p.  7- 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  I OQ 

$8,940,000  in  the  bonds  of  the  state  to  be  issued  to  the  railway 
companies.'  By  the  act  of  November  19,  all  further  issues  of 
bonds  were  suspended  till  March  i,  1859,  with  the  exception  of 
$2,776,000;^  in  case  the  bonds  of  the  state  rose  to  ninety  cents 
on  the  dollar  the  governor  might  make  further  issues. 

The  most  drastic  feature  of  the  law  of  November  19  was 
that  requiring  the  Board  of  Public  Works  to  attend  the  monthly 
meetings  of  the  directors  of  all  the  railroad  companies  which 
had  received  aid  or  were  to  receive  aid  from  the  state  ;  the 
board  was  also  authorized  to  examine  the  officers  of  the  com- 
panies under  oath,  and  to  send  for  persons  and  papers. 

However,  in  accordance  with  ancient  practices  the  legislature 
could  not  help  granting  some  favors.  The  Pacific  Railroad 
Company  had  found  the  7  per  cent,  bonds  of  the  South  West 
Branch,  "guaranteed"  [endorsed]  by  the  state,  very  hard  to 
dispose  of.  In  accordance  with  the  request  of  the  company 3 
the  legislature  granted  it  the  right  to  exchange  all  of  the  bonds 
heretofore  guaranteed  (4.5  million  dollars)*  for  the  6  per  cent, 
bonds  of  the  state  called  direct  bonds. 

That  many  of  the  companies  would  soon  default  in  the  pay- 
ment of  interest  on  the  bonds  granted  was  now  almost  a  foregone 
conclusion.  In  his  message  the  governor  held  that  the  levying 
of  a  tax  to  provide  for  the  payment  of  the  interest  on  the  state 
bonds  issued  to  the  companies  was  absolutely  indispensable  to 
protect  the  credit  of  the  state,  no  matter  what  might  be  the 
future  policy  of  the  state  and  the  companies  in  the  prosecution 
of  their  work.^  Accordingly,  for  the  purpose  of  augmenting  the 
interest  fund,  a  tax  of  one-tenth  of   i  per  cent,  was  levied   on  all 

^  House  Journal,  Adjourned  Session,  i8_57,  p.  3. 

^  To  the  Pacific      -             -----             -  Moo.ooo 

South  West  Branch  -----  200,000 

North  Missouri      ------  1,000,000 

St.  L.  and  I.  M.         -             -             -             -             -  476,000 

Platte  County       ------  700,000 


$2,776,000 


^  House  Journal,  Adjourned  Session,  1837,  Appendix,  p.  7. 
-^  Ibid.,  p.  23.  ^Ibid.,  p.  9. 


I  10  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

property  taxable  by  law  ;  the  tax  was  to  begin  in  1859  and  to  be 
discontinued  at  the  pleasure  of  the  legislature  after  1862.  The 
interest  fund  was  also  to  receive  the  difference  of  the  i  percent, 
saved  to  the  Pacific  Railroad  Company  through  the  exchange  of 
the  "guaranteed"  j's  of  the  company  for  the  "direct"  6's  of  the 
state.  And  further,  a  commissioner  was  to  be  appointed  to 
settle  the  claims  to  public  lands  falling  to  Missouri  under  the 
congressional  act  of  March  3,  1857,  and  pay  all  receipts  into  the 
state  interest  fund.  As  a  final  safeguard,  in  case  any  of  the 
companies  defaulted  in  the  January  or  July  interest  of  1858,  or 
in  the  January  interest  of  1859,  any  and  all  moneys  in  the  Treas- 
ury of  the  state,  except  the  School  Fund,  the  Road  and  Canal 
Fund,  and  the  Internal  Improvement  Fund,  were  to  be  devoted 
to  the  payment  of  such  interest ;  and  in  case  then  of  an  insuf- 
ficiency of  funds  for  this  purpose,  the  state  was  to  issue  bonds 
to  be  called  "Revenue  bonds"  of  Siooo  each,  bearing  not  more 
than  10  per  cent,  interest,  to  an  amount  necessary  to  pay  all 
arrearages  in  interest  dues. 

Although  adverse  fortune  awaited  all  the  companies  except 
one  in  the  near  future,  the  date  was  somewhat  further  removed 
than  was  generally  suspected  in  November  1857.  No  company 
defaulted  before  January  i,  1859,  and  two  held  out  till  July  i, 
1 86 1.  During  this  period,  moreover,  no  small  amount  of  work 
was  accomplished  by  the  several  companies.  During  the  years 
immediately  following  1857  there  came  the  natural  though 
only  partial  recovery  of  prices  and  the  remaining  bonds  of  the 
state  were  disposed  of  by  the  companies  at  from  seventy-eight 
to  ninety  cents  on  the  dollar.' 

§  1 3.  The  influence  of  better  times  is  also  seen  in  the  fact  that 
during  the  year  1858  the  companies  pushed  the  work  of  grading 
with  more  than  usual  vigor  and  laid  more  track  than  in  all  the 
years  preceding.  At  the  close  of  this  year  614  miles  of  track 
had  been  laid,  at  the  close  of    1859,  715  miles.-      The   Hannibal 

'  House  Journal,  I S58-Q,  Appendix,  pp.  158,  190,  and  257. 
^See  below,  p.  139. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  I  I  I 

and  St.  Joseph  Company  on  the  13th  of  February,  1859,  com- 
pleted its  road  to  the  Missouri  River.  The  North  Missouri 
effected  a  junction  with  the  Hannibal  and  St.  Joseph  early  in  the 
year,  and  before  December  the  St.  Louis  and  Iron  Mountain  had 
reached  Pilot  Knob.  "The  importance  of  opening  in  season  for 
the  spring  business"  lead  the  Hannibal  and  St.  Joseph  Company 
to  lay  the  last  sixty  miles  of  track  in  "mud  and  frost  and  on  a 
roadbed  very  imperfectly  graded,  with  little  or  no  ditching  and 
without  ballast."  Notwithstanding  the  unsound  character  of 
the  road  "a  very  considerable  traffic"  began  to  pass  over  it  at 
once.  Although  three  of  the  railways  aided  were  longer  than 
the  Hannibal  and  St.  Joseph,  none  of  them  had  yet  completed 
so  many  miles.  The  reason  for  this  rapid  progress  is  very 
obvious.  The  work  of  construction  was  not  begun  on  a  scale 
too  great  for  the  funds  on  hand,  and  after  it  was  begun  the  main 
effort  for  a  time,  between  1855  and  1857,  was  directed  to  secur- 
ing additional  funds.  A  bona  fide  subscription,  $1,402,700,  to 
the  capital  stock  of  the  company  at  the  beginning,  which  bore  a 
greater  proportion  to  the  estimated  cost  of  the  road  than  was 
secured  by  any  other  company  except  the  St.  Louis  and  Iron 
Mountain,  the  first,  second  and  third  mortgage  bonds  on  the 
lands  of  the  company  to  the  extent  of  eight  million  dollars, 
though  sold  at  very  heavy  discounts,  and  the  state  grant  of  three 
million  dollars,  though  also  sold  at  a  heavy  discount,  furnished 
means  for  the  construction  and  equipment  of  the  line.^  All  of  the 
state  bonds  and  four  million  dollars  of  the  first-mortgage  bonds  on 
the  lands  of  the  company,  were  disposed  of,  we  have  seen,  in 
1856;  the  remainder  were  disposed  of  before  November  1857.^ 
These  funds  enabled  the  company  to  carry  on  the  work  of  con- 
struction vigorously  after  it  was  begun.  Up  to  September  1857, 
as  has  been  seen,  the  company  had  only  sixty-four  miles  of  track 
laid  ;  much  grading  was,  however,  under  headway  at  this  time. 
And  about  eighteen  months  later,  February  1859,  by  the  hasty 

'^  Senate  Journal,  iSbo-i,  Appendix,  pp.  337  and  387. 

-  House  Journal,  1836-7,  Appendix,  p.  311  ;  also  Senate  Journal,  Adjourned  Ses- 
sion, 1837,  Appendix,  p.  40. 


112  ^      STATE    AID    TO    RAILWAYS    IN    MISSOURI 

construction  of  the  last  sixty  miles,  the  road  was  completed  to 
its  western  terminus,  the  length  of  the  whole  line  being  206.8 
miles.  The  total  gross  cost  of  the  road  was  $11,974,750,  or 
i?57, 905  per  mile  ;  however,  the  whole  expenditure  for  interest, 
discount,  exchange  and  commissions,  amounted  to  $5,295,072, 
making  the  cash  cost  of  the  road  $25,624  per  mile.' 

The  completion  of  the  North  Missouri  Railroad  to  the  Junc- 
tion with  the  Hannibal  and  St.  Joseph  was  regarded  by  the  com- 
pany as  insuring  the  success  of  the  road  ;  whether  or  not  this 
idea  was  well  founded  will  be  seen  later.  The  road  had  cost, 
including  interest  and  discount,  $5,866,677,  or  $34,700  per  mile. 
Deducting  the  $1,280,075  of  discounts  and  interest,  the  net  cash 
cost  of  the  road  becomes  $27,120  per  mile."* 

The  only  other  road  that  had  reached  the  point  from  which 
it  expected  to  secure  a  traflfic  suf^cient  to  pay  interest  and  divi- 
dends was  the  St.  Louis  and  Iron  Mountain.  The  total  cost  of 
this  road  was  $5,200,058,  or  $60,110  per  mile;  if  the  interest  and 
discount  charges  of  $1,154,313  be  deducted,  the  net  cash  cost  of 
the  road  becomes  $45,600  per  mile.3 

The  remaining  companies  were  progressing  very  slowly  at 
the  close  of  1859  as  compared  with  what  they  had  hoped  to 
accomplish.  The  Pacific  company  had  extended  its  road  to 
Syracuse,  168  miles  from  St.  Louis,  a  distance  just  equal  to  the 
length  of  the  North  Missouri  as  far  as  completed.  The  cost  of 
the  Pacific  road  was  $7,356,159,  or  $43,786  per  mile,  "exclusive 
of  rolling  stock  and  general  expenses,  interest,  exchange  and 
discounts."'  On  the  remaining  roads,  the  South  West  Branch, 
the  Cairo  and  Fulton,  and  the  Platte  County,  so  little  had  been 
accomplished,  that  it  is  impossible  to  say  anything  definite  con- 
cerning the  actual  or  prospective  cost  of  these  roads.  The 
grading  and  masonry  on  the  South  West  Branch  was  completed 
for  61  miles.  To  assist  in  the  construction  of  the  Cairo  and 
Fulton,  several  counties  along  the  line  had  subscribed  in  all 
514,500  acres  of  land,  estimated  at  one    dollar   per   acre.^     And 

^  Senate  Journal,  1860-1,  Appendix,  pp.  337  and  389. 

''  House  Journal,  1838-g,  Appendix. 

^Ibid.,  p.  239.  *Ibid.,  i8jg-6o,  p.  48.  ^  Ibid.,  /8j8-g,  pp.  11  and  199. 


EXECUTION    OF    THE    POLICY    OF    STATE    AID  II 3 

the  government  lands  falling  to  this  company  by  virtue  of  the 
act  of  February  9,  1853,  already  mentioned,'  were  now  definitely 
located,  and  amounted  to  57,007  acres.^  The  Platte  County 
Railroad  Company  had  just  begun  the  work  of  construction.^ 

§  14.  The  ^5,894,000  of  state  aid,  the  issuing  of  which  had 
been  postponed  by  the  act  of  November  19,  1857,  fell,  due  March 
I,  1859;  in  a  short  time  it  was  issued  to  the  companies  with  the 
exception  of  $1,150,000,  due  the  North  Missouri,  $99,000  due 
the  St.  Louis  and  Iron  Mountain,  and  $600,000  due  the  South 
West  Branch.-*  The  first  two  amounts  were  forfeited  by  the 
respective  companies  because  of  failing  to  pay  their  semi-annual 
interest  dues,  January  i,  1859. 

§15.  It  has  been  mentioned  that  the  act  of  December  7, 
1855,  creating  a  fund  for  the  payment  of  interest  on  bonds  in 
case  any  of  the  companies  defaulted  in  such  payments,  was  in 
itself  proof,  at  that  early  date,  that  the  people  of  the  state  were 
not  confident  of  the  final  success  of  the  companies.  The  act  of 
November  17,  1857,  suspending  until  March  i,  1859,  the  issue 
of  a  large  part  of  the  excessive  grant  of  December  lo,  1855,  for 
the  purpose  of  protecting  the  credit  of  the  state,  was  also  direct 
evidence  that  confidence  in  the  success  of  the  railway  enterprises 
was  declining.  Only  about  one  year  later,  December,  1858,  the 
legislature,  fearing  lest  the  spirit  of  speculation  might  get  the 
upper  hand  and  place  burdens  upon  the  state  credit  too  great  to 
be  borne,  proposed  an  amendment,  which  was  later  added  to  the 
constitution  of  the  state,  to  the  effect  that  "the  public  debt  of 
the  state  created  by  the  issue  of  bonds  or  other  state  securi- 
ties ....  for  the  prosecution  of  internal  improvements,  or  for 
any  other  purpose"  ....  except  to  repel  invasion  or  to  sup- 
press civil  war,  should  "never  exceed  the  sum  of  thirty  millions 
of  dollars." 5  During  this  session  (1858-9)  numerous  attempts 
were  made  to  grant  further  aid  to   several   of    the   companies  to 

'See  above  p.  74.  '^ Ibid.,  p.  14.  '■Ibid.,  1860-1,  p.  29. 

"^  House  Journal,  i8s8-Q,  Appendix,  p.  199.  ^  laws  of  Missouri,  /SsS-g,  p.  3. 


114  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

the  extent  of  the  margin  yet  remaining  under  the  amendment 
just  proposed.  None  of  these  attempts,  however,  succeeded. 
All  such  measures  were  voted  down  by  large  majorities.'  This 
refusal  of  the  legislature  to  grant  aid  was  decidedly  repugnant 
to  Governor  Stewart  who  gave  himself  the  credit  of  "having 
originated  the  railroad  system  of  the  state." ^  Consequently 
early  in  i860  (January  16)  the  governor  issued  a  proclamation 
convening  the  legislature  in  a  special  session. 3  At  this  session, 
however,  the  friends  of  the  aiding  policy  met  a  most  determined 
opposition  in  the  majority  of  the  internal  improvement  committee 
of  the  House*  Notwithstanding  this  opposition  a  bill  was 
passed  to  aid  several  of  the  companies.  But  the  governor,  not- 
withstanding the  fact  that  he  was  a  stanch  supporter  of  the  aid- 
ing policy,  felt  compelled  to  veto  this  measure,  because  it  left 
the  "state  without  any  control  in  the  premises,"  and  gave  the 
railway  companies  unqualified  power  in  the  management  of  the 
railway  enterprises,  and  because  it  released  the  lien  which  the 
state  had,  "for  her  own  protection  under  all  former  laws  pre- 
served. "^  This  was  on  the  29th  of  March  and  the  legislature 
adjourned  sine  die  on  the  following  day  without  further  consid- 
ering the  bill.^  This  was  the  last  attempt  in  Missouri  to  grant 
aid  to  railway  companies. 

We  have  seen  already  that  two  of  the  companies  being  aided 
by  the  state  failed  to  meet  their  interest  dues  January  i,  1859. 
Beginning  with  January  i,  i860,  further  failures  of  a  similar 
nature  are  to  be  chronicled.  Indeed,  from  this  time  on  to  the 
close  of  the  notable  month  of  March  1868,  when  the  state  re- 
leased her  lien  on  the  various  roads  for  a  mere  pittance,  the 
career  of  every  company,  except  the  Hannibal  and  St.  Joseph, 
was  unfortunate  and  through  her  connection  with  them  the  state 
was  forced  into  a  most  unenviable  position. 

'^  House  and  Senate  Journals,  Called  Session,  iS6o,  pp.  27-33. 

'^  House  Journal,  Called  Sessiofi,  i860,  p.  146. 

'^  Senate  Journal,  Called  Session,  /86o,p.  3. 

'■  House  and  Senate  Journals,  1S60,  Appendix,  pp.  27-33. 

■^  House  Journal,  Called  Session,  iSbo,  p.  154.  ^  Ibid.,  p.  158. 


CHAPTER  IV. 

PROGRESS    AND    DRIFT    OF    THE    AIDED     RAILWAY     ENTER- 
PRISES   DURING    THE    WAR.     1860-1866. 

^  I.  There  is  no  doubt  that  the  opposition  of  the  House  Com- 
mittee on  Internal  Improvements  to  the  giving  of  further  aid  dis- 
played at  the  called  session  of  i860,  as  well  as  the  failure  of  both 
Houses  to  reconsider  the  bill  vetoed  by  the  governor,  March  29, 
i860,  was  in  a  large  measure  due  to  the  fact  that  the  majority  of 
the  companies  aided  had  already  defaulted  in  their  interest  pay- 
ments. Following  the  default  of  the  North  Missouri  Company 
and  of  the  St.  Louis  and  Iron  Mountain  Company,  January  i, 
1859,  the  Pacific,  and  the  Cairo  and  Fulton  Railroads  defaulted 
January  i,  i860. 

§  2.  Although  it  was  at  first  believed  that  the  default  of  all 
these  companies  was  temporary,'  the  generally  depressed  con- 
dition of  trade,  due  largely  to  the  disturbed  state  of  political 
affairs  which  gave  no  evidence  of  early  settlement,  did  not  give 
any  real  ground  for  such  an  opinion.  Notwithstanding  the  fact 
that  the  financial  market  had  experienced  a  rebound  since  1857, 
the  bonds  of  the  state  rising  from  65  to  90  cents  on  the  dollar,  the 
price  now  fell  again,  some  of  the  bonds  selling  as  low  as  48  cents. ^ 
The  banks  of  Missouri,  compelled  in  1857  to  suspend  specie  pa>  - 
ments,  had  to  resort  again  (November  1859)  to  the  same  extraor- 
dinary means  of  defense. 3  Although  the  sentiment  of  the  people 
was  in  favor  of  a  speedy  completion  of  the  defaulting  railways 
in  order  that  their  earnings  might  enable  them  to  meet  interest 
charges,   it  was  clearly  perceived  that  to  throw  more  bonds  on 

'Governor's  Message,  House  Journal,  iS^S-g,  p.  18. 
^  House  Journal,  1862-^,  Appendix,  p.  67. 
3  Governor's  Message,  Senate  Journal,  j  860-1,  p.  36. 

"5 


Il6  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

the  market  at  this  time  (i860)  would  be  only  to  increase  the 
future  burdens  of  the  state.  Such  being  the  general  financial 
and  political  condition  of  the  country,  the  inevitable  result 
seemed  to  be  that  the  remaining  companies  would  default  at  an 
early  date ;  consequently  there  was  no  occasion  for  surprise 
when  the  South  West  Branch  and  the  Platte  County  Railroads 
failed  to  meet  their  interest  dues,  July  i,  1861.  Only  one  com- 
pany, the  Hannibal  and  St.  Joseph,  weathered  all  the  storms 
between  i860  and  1865,  proving  able  at  all  times  to  meet  its 
interest  dues. 

§  3.  It  is  of  course  true  that  the  war  and  the  depressed  money 
market  operated  greatly  to  the  disadvantage  of  these  companies  ; 
but,  with  the  exception  of  the  crisis  of  1857  and  that  general 
feeling  of  uneasiness  and  distrust,  which  always  precedes  a 
great  social  eruption  like  the  Civil  War,  these  causes  did  not 
begin  to  operate  until  most  of  the  companies  had  already 
defaulted.  The  real  cause  of  their  default  was  lack  of  traffic  ; 
they  could  not  earn  enough  to  pay  operating  expenses  and  inter- 
est charges,  to  say  nothing  of  dividends.  A  few  details  regard- 
ing the  traffic  at  this  time  as  shown  by  the  earnings  of  the  roads 
will  demonstrate  very  clearly  that  this  was  the  main  cause  of  the 
default,  and  will  indicate  to  some  extent  what  were  the  possi- 
bilities of  the  future. 

At  the  close  of  the  year  1862  the  business  of  the  Pacific 
Railroad  was  reported  to  be  "fair."  During  the  preceding  four 
years  the  total  earnings  of  the  road  had  been  ^2,682,000,  and 
the  net  earnings,  ;^  1,1 88, 946.^  And  although  the  annual  net 
earnings  of  the  road  had  increased  during  these  four  years  from 
$259,61 1  to  $365,319,  the  amount  was  not  yet  sufficient  to  meet 
the    interest   dues    of  the   company  which    on    the    state   bonds 


'1859- 
1860 

1861  -       -       -       - 

1862  -       -       - 

— See  House  Journal,  1862-3,  Appendix,  p.  66. 


Gross 

Total 

Net 

earnings 

expenses 

earnings 

-   ^630,839 

i?37I,227 

^259,612 

648,113 

361,832 

286,281 

-      683,749 

406,015 

277,734 

719,298 

353,978 

365,320 

PROGRESS    AND    DRIFT    OF    AIDED    RAILWAY    ENTERPRISES        11/ 

alone  were  $420,000  annually.  Considering  the  rate  of  increase 
in  the  net  earnings,  this  company  was  in  a  measure  justified  in 
believing  that  the  road  when  completed  would  "pay  fair  divi- 
dends." '  The  net  earnings  of  the  North  Missouri  for  the  year 
ending  April  i,  1862,  were  $178,000,  and  for  the  first  seven 
months  of  1863,  $66,000,  but  its  annual  interest  dues  to  the  state 
were  $261,000.  Indeed,  although  the  railway  presidents  of  the 
state  were  usually  quite  optimistic  concerning  the  future  earnings 
of  the  railways,  the  most  favorable  estimate  which  the  president 
of  the  North  Missouri  could  make  at  this  time  was  that  the  net 
earnings  of  this  road  "within  one  year's  time  after  the  close  of 
the  war  ....  would  reach  $200,000  ....  which  would  enable 
the  company  to  come  within  $61,000  of  paying  the  interest  due 
to  the  state."  ^  On  the  St.  Louis  and  Iron  Mountain  road  there  was 
an  increase  of  traffic  between  i860  and  1863,  but  the  increase 
in  expenses  went  on  at  almost  as  rapid  a  rate  as  did  the  increase 
in  earnings.  Moreover,  the  president  of  the  company  stated 
that  it  was  not  probable  that  these  expenses  would  be  diminished 
in  the  future  ;  on  the  other  hand  they  would  most  likely  increase 
because  of  the  "natural  decay"  of  bridges  and  of  the  "worn 
condition"  of  the  rails,  both  of  which  would  "soon  require  large 
outlays  for  renewals." 3  The  South  West  Branch  Company, 
between  i860  and  1863,  made  some  expenditures  in  construc- 
tion, repairs  and  in  purchase  of  rolling  stock.  But  the  road  was 
earning  practically  nothing  and  could",  therefore,  pay  nothing 
on  its  interest  account. ^  The  Platte  County  Railroad  Company 
with  only  5  i  J/^  miles  of  road  completed,  was  earning  little  above 
expenses.  Notwithstanding  the  fact  that  the  greater  part  of  this 
road  was  south  of  St.  Joseph  connecting  St.  Joseph  and  Atchison 
(Kansas)  and  the  assurance  of  the  president  of  the  company  in  April 
1 860  that  the  business  of  this  part  during  the  limited  period  since 
it  had  been  opened  demonstrated  that  its  net  earnings  would  alone 
be  "more  than  sufficient  to  pay  the  interest  upon  the  entire  appro- 
priation  of   state  credit,"  ^  the   company  defaulted  within  about 

^  House  Journal,  1862-3,  Appendix,  p.  67.  *Ibid.,  p,  198. 

'Ibid.,  p.  64.  ^Ibid.,^.  215.  ^ Ibid.,  i8bo-i,  p.  360. 


Il8  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

one  year  from  this  time'  To  make  this  a  paying  road  it  would 
have  to  be  extended  to  Kansas  City  ;  but  there  was  much  work 
yet  to  be  done  before  reaching  that  point.  The  Hannibal  and 
St.  Joseph  which,  with  the  exception  of  a  short  period  in  January 
1862,  had  always  met  its  interest  charges,'  was  able  as  usual  to 
report  a  far  more  favorable  condition  of  affairs.  The  gross 
earnings  of  the  road  in  i860  were  more  than  one  million  dollars. 3 
This  one  line,  the  Hannibal  and  St.  Joseph,  which  we  have  seen 
to  be  the  most  prosperous  of  all,  was  the  only  line  completed  ; 
and  we  may  reason  from  this  that  had  the  other  roads  been 
completed  their  net  earnings  would  have  been  more  nearly  equal 
to  the  demands  made  upon  them.  The  Pacific  Compan}'  had 
completed  about  three-fourths  of  its  line,  and  was  second  in  the 
scale  of  prosperity.  The  lines  of  the  remaining  roads  were  not 
half  completed,  therefore  the  earning  capacity'  of  these  roads 
was  greatly  limited. 

A  further  reason  for  lack  of  funds  on  the  part  of  some  of 
the  companies  was  the  unproductiveness  of  the  land  grants.  At 
the  time  of  its  default  the  Pacific  Railroad  Company  had 
disposed  of  only  about  half  (78,000  acres)  of  its  grant  for 
;?5i 30,000.''  Of  the  1,040,000  acres  belonging  to  the  South 
West  Branch, 5  only  7000  had  been  sold,  the  price  averaging 
about  $2.50  per  acre.  The  Cairo  and  Fulton  had  hypoth- 
ecated a  large  amount  of  bonds  upon  its  lands, ^  but  the 
proceeds  of  the  bonds  were  to  be  used  in  liquidating  debts 
already  contracted  in  the  construction  of  less  than  one-half  of 
the  road.  The  j)roceeds  from  land  actually  sold  by  the  com- 
pany amounted  practically  to  nothing.  The  land  sales  of  only 
one  road,  the  Hannibal  and  St.  Joseph,  had  amounted  to  enough 
to  be  of  real  service  in  construction  or   in  payment   of  interest. 

'  Senate  Journal,  1 860-1,  Appendix,  p.  360 ;  also  House  Journal,  1862-3, 
Appendix,  p.  319. 

'^  House  Journal,  1862-3,  Appendix,  p.  312. 

^  Ibid.,  p.  313. 

*  Senate  Journal,  /<?6c>-/,  Appendix,  p.  399. 

^Ibid.,  p.  451. 

^Senate  Journal,  1862-3,  Appendix,  p.  349. 


PROGRESS    AND    DRIFT    OF    AIDED    RAILWAY    ENTERPRISES        IIQ 

These   sales   amounted  to    33,000  acres,  at  an  average  of  nearly 
$1 1  per  acre.' 

The  amount  of  interest  due  the  state  depended  of  course 
upon  the  amount  of  aid  granted.  The  state  in  making  the 
grants  being,  as  has  been  seen,  very  confident  of  the  ultimate 
success  of  the  companies,  had  shown  so  many  favors  to  them 
that  they  came  to  depend  too  much  upon  the  state.  If  the  state 
had  demanded  a  larger  expenditure  of  private  funds,  the  earn- 
ings of  the  roads  would  of  course  at  all  times  have  borne  a 
much  greater  relative  proportion  to  the  interest  amounts  due  to 
the  state. 


Original  number  of 

Acres 

Average  price 

County 

acres  granted 

sold 

per  acre 

'  Marion     - 

-       1,757.08 

85- 

$21.17 

Lewis     - 

769.19 

80. 

5.00 

Ralls 

4,822.20 

1,380.14 

8.43 

Pike     - 

1,525-45 

40. 

7.00 

Monroe     - 

-         9,217-56 

200. 

14.00 

Shelby 

27,025.06 

251. 

8.96 

Knox 

960.00 

Macon 

117,789.45 

4,091.18 

8.18 

Randolph 

6,230.60 

302.90 

7.16 

Chariton 

28,062.77 

240. 

10.56 

Lynn 

72,340.00 

5,136-84 

9.20 

Grundy 

-      9,078.86 

226.74 

11.25 

Livingstone     - 

-         75,291.53 

2,809.71 

10.21 

Carroll 

22,008.98 

282.75 

7.29 

Caldwell 

-         83,271.85 

5,744-69 

12.91 

Daviess     - 

38,316.28 

7,965.74 

11-43 

De  Kalb 

54,035.38 

1,649.22 

10.23 

Clinton     - 

-      43,759.48 

1,368.99 

13.61 

Andrew 

3,204.15 

882.20 

11.03 

Buchanan 

1,853.55 

720. 

9.50 

601,329.39 

33,177-10 

#10.61 

Inside  six-mile  limit 

-      229,603.62 

18,664.78 

11.91 

Outside       " 

371,725.77 

14,522.32 

8.93 

Description : 

Pre-emption  sales 

- 

1,889.64 

$  2.50 

Cash  sales  other  than 

pre-emption     - 

10,322.60 

12.16 

Short  credit  sales 

. 

1,461.53 

12.10 

Long  credit  sales 

. 

19,513.33 

10.44 

{Senate  Journal,  1 8bo-i ,  Appendix,  p.  399). 


120  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

§  4.  In  Missouri,  as  elsewhere,  inexperience  in  construction 
was  one  great  cause  of  the  increased  cost,  and  ultimately,  there- 
fore, of  the  failure  of  many  of  the  railway  enterprises.  The 
report  of  the  committee  of  1855  upon  this  point  has  been 
referred  to.'  In  1859  the  Board  of  Public  Works  stated  that 
"much  of  the  embarrassment  which  now  surrounds  the  system 
is  no  doubt  attributable  to  inexperience  and  erroneous  ideas  in 
regard  to  locations  and  contracts.  A  large  amount  of  money 
has  been  absorbed  in  these  errors,  probably  a  sum  sufficient  to 
open  several  of  the  roads  to  a  point  where  they  are  intended  to 
terminate."^  By  comparing  the  cost  per  mile  in  Missouri  with 
that  in  other  states  for  the  same  period  it  will  appear  that  inex- 
perience or  some  other  cause  resulted  in  a  greatly  increased  cost 
in  Missouri.  There  are,  however,  many  factors  to  be  taken  into 
account  in  such  a  comparison.  In  the  first  place  the  topography 
of  the  states  compared  must  not  be  overlooked.  Moreover,  in 
the  West  from  1850  to  i860,  labor  of  a  given  grade  invariably 
cost  more  than  it  did  in  the  East.  And  again,  contracts  might 
be  in  force  at  a  given  time  upon  a  given  road  so  that  a  rise  or 
fall  in  the  cost  of  material  or  labor  would  not  upon  this  road 
appear  in  a  greater  or  less  cost  per  mile  ;  the  contractor  might 
reap  all  the  gain  or  bear  all  the  loss,  as  the  case  might  be. 

At  all  events,  from  the  tables ^  given,  it  appears  that  Missouri 
compares    unfavorably    with    all     other     western    states.     And 

'  See  above,  p.  92. 

-House  Journal,  rSsS-g,  Appendix,  p.  148. 

3 The  cost  of  the  roads  built  in  the  following  states  between  1850  and  i860  was : 

State  Miles  Cost  per  mile 

Maine -  472  $35,000 

Massachusetts        .         .         -         -         .  1274  47,000 

New  York         --....  2701  48,000 

Pennsylvania         -         .         .          .          .  2542  56,000 

Alabama            -...-.  74-^  22,000 

Georgia 1404  20,000 

Ohio 2299  37,000 

Illinois          --...-  2867  36,000 

Iowa        - 679  28,000 

Missouri        --..-.  817  51,000 

— See  Eighth  Census  of  the  United  States,  "Miscellaneous,"  p.  331. 


PROGRESS    AND    DRIFT    OF    AIDED    RAILWAY    ENTERPRISES        121 

although  the  surface  of  the  state  south  of  the  Missouri  River, 
the  section  in  which  four  of  the  roads  were  situated,  resembled 
that  of  the  eastern  states  in  unevenness,  yet  this  should  not 
have  increased  the  cost  of  the  whole  system  so  as  to  make  it 
greater  than  that  of  roads  in  New  York  and  Massachusetts. 
The  average  cost  of  11,212  miles  of  railway,  built  in  nine  inte- 
rior states  between  1850  and  i860,  was  ^37,900.  From  this  it 
appears  that  the  $50,000  average  cost  in  Missouri  was  necessarily 
far  above  the  average  in  other  states.  Even  if  the  total  sum 
(;^3, 108,723) '  lost  in  discounts  on  the  state's  bonds  be  deducted 
this  would  not  bring  the  average  cost  of  the  Missouri  railways 
under  $46,000  per  mile.  Now  it  may  not  be  exactly  fair  to 
take  these  figures  too  literally  and  say  that  during  the  decade 
between  1850  and  i860  the  railways  built  in  Missouri  cost 
exactly  $12,000  per  mile  more  than  the  railways  built  in  the 
surrounding  states,  yet  it  is  very  evident  that  they  cost  a  great 
deal  more  than  in  the  neighboring  states,  and  a  great  deal  more 
than  they  should  have  cost. 

The  question  as  to  a  culpable  misuse  of  the  state  funds 
granted  to  the  companies  was  raised  as  early  as  1855.  And 
although  the  investigating  committee  as  already  seen  made  that 
year  a  very  thorough  investigation,^  reviewing  every  phase  of  the 
situation  of  the  railways  of  the  state,  it  found  nothing  to  warrant 
the  opinion  that  the  affairs  of  the  several  companies  "  had  been 

Railroads  built  in  Missouri  between  1850  and  i860  and  their  cost  per  mile  : 
Road 
Pacific  Railroad  -         -         .         - 

Hannibal  and  St.  Joseph  -         -         . 

Cairo  and  Fulton         .         .         -         . 
Platte  County  Road  .  .         .  . 

South  West  Branch      -         -         -         - 
North  Missouri         ----- 
St.  Louis  and  Iron  Mountain 

Total  796  Average  $50,000 

— See  tables,  Appendix  i. 
Also,  Eighth  Census  of  the  United  States,  "Miscellaneous,"  p.  331. 
'  See  tables,  Appendix  i. 
=  See  above,  pp.  91-93. 


Miles 

Cost  per  mile 

189 

$53,700 

206 

58,129 

26 

33,000 

44 

30,000 

77 

56,833 

168 

41,000 

86 

62,000 

122  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

unfaithfully  administered  or  their  funds  improperly  or  wastefully 
expended."  There  is  indeed  little  evidence  of  corruption  in  the 
management  of  the  railway  enterprises  of  the  state  before  the 
u  ar,  yet  there  is  evidence  of  exceedingly  loose  management  and 
of  some  extravagance.  In  May  i860  the  Board  of  Public  Works 
recommended  a  suspension  of  further  issues  of  bonds  to  the 
Platte  County  Railroad  Company  until  it  would  make  "a  com- 
plete and  satisfactory  exposition  of  its  financial  and  general 
management."  '  At  the  close  of  the  same  year  the  Board  was 
"forced  to  the  conclusion  that  the  law  granting  aid  to  the  Platte 
County  Railroad  Company  had  not  been  complied  with  in  draw- 
ing the  bonds  of  the  state."  ^  Yet  the  expenditures  of  the  com- 
pany at  this  time  amounted  to  only  $1,445,1 59,3  and  this  sum 
since  it  included  but  $700,000  of  the  state  bonds  would  be  at  the 
rate  of  one  dollar  of  private  funds  for  every  dollar  of  aid,  a  ratio 
in  accordance  with  the  special  provision  concerning  this  road 
contained  in  the  act  of  March  3,  iSs/."*  At  most,  therefore,  the 
only  violation  of  law  that  could  be  charged  against  this  company 
was  that  between  May  and  December  of  i860  the  company  drew 
$500,000  of  its  grant  at  a  more  rapid  rate  than  was  justified  by 
law  ;  however,  in  December,  the  total  expenditures,  we  have  just 
seen,  bore  the  required  proportion  to  the  amount  of  state  bonds 
issued.  On  the  other  hand,  the  criticism  made  by  the  Board  of 
Public  Works  against  the  Cairo  and  Fulton  Company,  that  "a 
very  large  portion  of  the  bonds"  granted  for  the  use  of  this 
company  been  drawn  "in  palpable  violation  of  law,"^  was  well 
founded.  The  total  grant  of  state  bonds,  $650,000,  had  been 
received  and  expended  by  the  company,  and  yet  the  total  expendi- 
tures of  the  company,  exclusive  of  interest,  discount,  and  the  like, 
was  only  $703,863.5  Consequently  the  company  had  not  spent 
one  dollar  of  private  funds  for  every  two  dollars  in  state  bonds 
received.     The  loosest  management  and  the  most  patent  waste  of 

^  Senate  Journal,  /6'60-y,  Appendix,  p.  355.  ^  Ibid.,  p.  336.  '^  Ibid.,  p.  375. 

■*  Compilation  of  the  Laws  in  Reference  to  such  Railroads  as  have  received  Aid  from 
the  State,  p.  94. 

^  Senate  Journal,  /860-/,  Appendix,  p.  334. 


PROGRESS    AND    DRIFT    OF    AIDB:D    RAILWAY    ENTI:K  PRISES        I  23 

funds  took  place  in  connection  with  the  South  West  Branch.  At 
the  close  of  i860,  $3,922,000  of  direct  and  guaranteed  bonds  of 
the  state  had  been  received;  deducting  the  discount,  $653,272, 
the  remainder  $3,268,727,  had  been  spent  on  the  road,  and  yet 
the  total  expenditure  of  all  funds  amounted  to  only  $3,900,450.^ 
There  was  no  law  to  justify  such  a  large  issue  of  bonds  where  so 
small  an  amount  of  private  funds  had  been  raised.  It  is  true 
that  the  law  of  March  3,  1857,  provided  that  the  governor  could 
issue  bonds  in  a  greater  proportion  to  private  funds  than  two  to 
one,  if  the  companies  deemed  it  advisable  in  order  "to  take 
advantage  of  a  favorable  money  market."^  The  later  law  of 
November  17,  1857,^  temporarily  interrupted  these  provisions  as 
far  as  the  South  West  branch  was  concerned.  This  law  provided 
that  no  more  bonds  should  be  issued  to  this  company  with  the 
exception  of  $500,000  worth  in  case  they  could  be  sold  at  ninety 
cents  on  the  dollar  ;  but  this  suspension  expired  by  limitation, 
January  1,  1859,  and  the  law  of  March  3,  1857,  was  thereafter 
again  in  force.  However,  discounts  to  the  extent  of  $653,272, 
on  $3,922,000  does  not  indicate  that  a  favorable  money  market 
had  been  found.  In  fact  the  exact  state  of  the  market  is  to  be 
seen  in  the  fact  that  the  $1,087,000  in  the  bonds  of  the  company 
guaranteed  by  the  state  and  sold  between  November  21,  i860, 
and  November  28,  1861,  brought  only  $688,771,  or  an  average 
of  about  sixty-four  cents  on  the  dollar. ■♦  In  both  of  the  laws  just 
referred  to  it  was  provided  that  in  case  of  a  default  of  the  com- 
pany no  more  bonds  should  be  issued.  On  December  29,  i860, 
there  remained  but  $400,000  due  to  the  South  West  Branch  in 
bonds  "guaranteed"  by  the  state. ^  This  amount  (which  com- 
pleted the  whole  issue  [4.5  million  dollars]  to  this  road)  was 
issued  between  December  29,  i860,  and  February  4,  1861,  only 
five  or  six  months  prior  to  the  default  of  the  company  on  July  i, 

^  Senate  Journal,  iSbo-i,  Appendix,  pp.  340,  341  and  443. 

-  Act  of  March  3,  1857,  sec.  12.     Compilation   of  the    Larvs    in  Reference  to  such 
Railroads  etc.,  p.  89. 
^  Ibid.,  p.  95. 

*  House  Journal,  1S63-J,  Appendix,  p.  207. 
^  Senate  Journal,  1S60-1 ,  Appendix,  p.  441. 


124  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

of  the  latter  year.'      From  what  has  been  said  it  is  very  clear  that 
almost  the  whole  cost  of  the  South  West   Branch  to  the  close  of 
1862  is  to  be  accounted  for  out  of  state  grants.     This  cost  was 
$4,895,511,   of  which   4.5    million   dollars  were  either  "direct" 
bonds  of  the  state  or  bonds  "guaranteed"  by  the  state.     As  this 
great  sum  was  spent  in  constructing  only  seventy-seven  miles  of 
railway  it  seems  evident  that  no  small  amount  of   it  was  squan- 
dered.   This  sum  indeed  would  make  the  average  cost  $63,580  per 
mile  ;  and  yet  the  company,  notwithstanding  their  great  expen- 
diture, had  the   boldness   to  represent  to  the   governor  that  they 
could  complete  the  remainder  of  the  road,  210  miles,  to  be  sure 
extending  through  a   somewhat   less    uneven    country  than  that 
through    which    the   first   seventy-seven   miles    extended,   at  an 
average  cost  of  $19,211    per  mile.^     Well    might   the    Board  of 
Public  Works  in  1861    say   of  the  South   West   Branch:     "This 
road  is  costing  a  large  amount  of  money  per  mile.     The  expen- 
ditures indicate  heavy  profits  in  its  construction  and  make  man- 
ifest the  difficulty  of   completing   the   road  without  a  change  in 
its  policy  ;  "  3  and  "  It  will  be  dif^cult  if  not  impossible  to  perfect 
and   sustain   the  railroad   system  in   this   state    unless  a    radical 
change  is  introduced  in  regard   to  its  construction  and  manage- 
ment."     However,  at  this   time    no   amount  of  retrenchment  in 
expenses  or  care  in  construction  could  have    saved   many  of  the 
companies  from  bankruptcy  in  the  course  of  the  next  few  years. 
The   interruption   caused   by   the  war  was   sufficient  to  diminish 
further  the  rate  of  increase  in   the   net   earnings   which,  we  have 
seen,  were  already   too   small   to  meet   operating  expenses   and 
interest  charges.     The  financial  condition   and  prospects  of  the 
several  companies  at  the  close  of  the  war  will  be  taken  up  later. 

§5.  It  has  been  seen  already  that  the  state  began  as  early  as 
December  1855  to  lay  the  foundations  of  a  state  interest  fund 
in  order  that   it   might   be  prepared    for   emergencies ;   that  in 

^  Senate  Journal,  Adjourned  Session,  1863—4,  Appendix,  p.  718. 
*  House  Journal,  1862-3,  Appendix,  p.  195. 
'^  Senate  Journal,  1860-1,  Appendix,  p.  340. 


PROGRESS    AND    DRIFT    OF    AIDED    RAILWAY    ENTERPRISES        I  25 

November  1857  very  important  additions  had  been  made  to  this 
fund ;  and  that  at  this  time  also  authority  was  given  to  the  gov- 
ernor to  issue  "Revenue"  bonds  for  the  purpose  of  paying  inter- 
est, in  case  such  a  course  should  prove  necessary.  Even  before 
the  breaking  out  of  the  war  all  of  these  sources  had  been  brought 
into  requisition  ;  and  very  soon  after  the  war  began,  all  of  them 
proved  inadequate  to  sustain  the  credit  of  the  state.  In  June 
1859  ^400,000  in  the  bonds  of  the  state,  called  "Revenue" 
bonds,  running  for  two  years  and  drawing  6  per  cent,  inter- 
est, had  been  issued  and  disposed  of  to  meet  the  accruing 
interest  of  defaulting  railway  companies.'  In  June  1861,  accord- 
ingly, the  state  found  itself  involved  on  account  of  interest  pay- 
ments for  defaulting  railway  companies  to  the  amount  of  $911,- 
051.^  To  meet  these  demands  the  state  possessed  special  funds 
available  to  the  extent  of  only  ;^4 19,066,  leaving  a  deficit  of 
$491,985  which  would  have  to  be  made  up  from  general  revenue. 
The  state  was  not  able  to  make  up  this  sum,  and  consequently 
failed  to  meet  the  interest  falling  due  at  this  time.  The  last 
coupons  paid  till  after  the  close  of  the  war  were  those  of  Jan- 
uary 1 86 1.  Although  the  state  interest  fund  had  been  consti- 
tuted for  paying  the  interest  on  the  railway  debt,  the  state  had 
not  been  able,  during  her  "struggle  for  existence  as  a  member 
of  the  union,"  to  provide  any  income  for  this  fund. 3  Not  only 
could  the  state  not  meet  the  interest  due  on  railway  bonds,  but 
she  had  to  issue  in  1861  and  1864,  for  war  purposes,  "Defense 
Warrants"  to  the  amount  of  $1,476,575,  and,  in  1863,  1865  and 
1866,  "Union  Military  Bonds"  to  the  amount  of  6.4  million  dol- 
lars. These  "Warrants"  and  Bonds  forming  the  war  debt  of  the 
state  to  the  amount  of  $7,876,575  were  issued  in  accordance  with 
the  ordinances  of  October  18,  1861,  and  June  13,  1862,  passed 
by  the  people  of  Missouri,  "  in  convention  assembled." "*     It  was 

'^Auditor's  Report,  1883-4,  part.  2.  p.  102. 

^  Senate  Journal,  7(?6o-/,  Appendix,  p.  35. 

3  Governor's  Message,  House  Journal,  1862-3,  p.  20,  and  Auditor's  Report,  5^«(7/^ 
Journal,  i86y.  Appendix,  pp.  118  and  1 1 9. 

*  See  Ordinances  in  Laws  of  Missouri,  1864,  pp.  683,  685,  693,  and  694 ;  also 
Senate  Journal,  1867,  AT^'^&ndix,  ^.  11^. 


126  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

also  found  necessary  soon  after  the  beginning  of  the  war  to 
increase  the  rate  of  taxation.  For  1863  a  revenue  tax  of  32 
cents  and  a  military  tax  of  20  cents  replaced  revenue  and  inter- 
est taxes  of  30  cents  on  the  lOO  dollars  valuation  of  property; 
also  a  "revenue"  poll  tax  of  one  dollar  and  a  "military"  poll 
tax  of  two  dollars  were  imposed.  Again,  persons  who  did  not 
wish  to  serve  in  the  army  could  purchase  exemptions  from  such 
duties  for  the  sum  of  thirty  dollars  each  and  a  tax  of  i  per  cent, 
upon  the  assessed  valuation  of  their  property.'  However,  a  small 
reduction  of  the  former  amount  of  taxes  was  made  at  this  time 
in  the  discontinuation  of  the  1.6  per  cent,  tax  for  asylum  pur- 
poses. 

§  6.  The  progress  of  the  railways  during  the  war  was  exceed- 
ingly slow.  In  addition  to  the  depressed  condition  of  trade  in 
general,  interruptions  to  traffic  took  place  at  the  most  unexpected 
moments.  Such  interruptions  occurred  to  the  business  of  nearly 
all  the  railways,  and  especially  to  the  Pacific  and  the  North  Mis- 
souri. "In  May  1861,  by  orders  of  Governor  Jackson,  the  Osage 
and  Gasconade  bridges  [on  the  Pacific]  were  partially  destroyed, 
and  those  over  Gray's  Creek  and  the  Lamine  [River]  near  Otter- 
ville,  entirely  so  ;"  and  such  was  the  condition  of  the  company 
that  the  bridges  "could  not  be  repaired  and  the  road  opened  to 
trade  until  the  ensuing  November."^  In  June,  July,  and  Decem- 
ber 1 86 1  the  North  Missouri  Railroad  sustained  damages  to  the 
extent  of  $86,310,  the  result  of  an  order  given  by  Governor 
Jackson  and  Major  General  Price  to  destroy  the  road.^  In 
October  1864  the  North  Missouri  Company  sustained  a  loss 
estimated  at  $100,000  and  the  Pacific  a  loss  in  the  destruc- 
tion of  a  great  number  of  bridges,  stations,  and  the  like,  as 
the  result  of  a  raid  by  General  Price. "♦  Such  interruption  of 
course   greatly    reduced    the    income    of    the    roads.       Whether 

^Auditor's  Report,  1883-4,  part  2.  p.  312. 

"^  Senate  Journal,  1862-3,  Appendix,  p.  189. 

'i  House  Journal,  /86j,  Appendix,  p.  648. 

*  Ibid.,  p.  652;  also  Senate  Journal,  iS6y,  Appendix,  p.  87S. 


PROGRESS    AND    DRIFT    OF    AIDED    RAILWAY    ENTERPRISES        12J 

or  not  the  Federal  Government  made  good  these  damages  of  i86i 
cannot  be  determined  from  the  records  ;  there  is  evidence  that  it 
did  and  that  it  did  not.'  Although  trade  during  these  years 
was  not  of  such  magnitude  as  it  would  have  been  in  the  absence 
of  war,  there  was  a  steady  increase  in  the  earnings  of  the  rail- 
ways from  the  ordinary  traffic  and  from  the  transportation  of 
munitions  of  war  for  the  United  States.  These  earnings  served 
the  purpose  of  keeping  the  railways  in  repair  if  they  did  not 
furnish  any  large  sums  for  extension.^ 

During  the  period  from  i860  to  1865  the  two  roads  which 
naturally  demanded  and  received  the  most  attention  were  the 
Pacific  and  the  North  Missouri ;  the  great  question  being  how 
to  get  funds  to  extend  and  complete  them.  It  has  been  seen 
that  the  veto  by  Governor  Stewart  in  March  i860  of  a  bill 
granting  further  aid  to  the  Pacific  deprived  this  company  of  the 
expected  aid.  Failing  in  getting  this  aid  the  company  was 
compelled  to  suspend  the  work  of  construction  almost  entirely 
for  two  years.  The  company  succeeded,  however,  in  opening 
the  road  to  Sedalia  in  February  1861,  and  in  beginning  the 
work  of  construction  westward  from  this  place.  However,' "  the 
road  stopped  [here]  for  nearly  two  years  and  the  disturbed 
condition   of  the  country  operated  to  stop  all  work  on  construc- 

'  The  president  of  the  company  says,  "  With  the  view  of  disabusing  the  minds  of 
those  impressed  with  the  idea  that  the  Federal  Government  had  rebuilt  the  bridges 
destroyed  and  repaired  the  rolling  stock  partially  broken  up  and  lost  to  the  company 
as  well  as  track  torn  up  and  rails  broken,  I  beg  to  say  such  was  not  the  fact ;  and  fur- 
ther .  .  .  had  the  company  received  the  usual  and  uniform  rates  paid  to  the  roads 
east  of  the  Mississippi  and  to  the  Iron  Mountain  and  North  Missouri  in  our  own  state, 
its  receipts  would  have  been  largely  increased  .  .  .  and  shown  a  large  amount 
applicable  to  the  extension  of  the  road,  or  to  the  payment  of  its  indebtedness  to  the 
state." — Senate  Journal,  1862-j,  Appendix,  p.  189. 

The  governor,  in  his  inaugural  address  to  the  session  of  the  legislature  of  1862-3, 
says,  "  Although  persons  engaged  in  rebellion  have  upon  several  occasions  interrupted 
for  short  periods  the  travel  and  transportation  upon  the  several  roads,  yet  the  impor- 
tance of  the  roads  in  military  movements  within  the  state  has  been  such  that  the  gov- 
ernment has  rapidly  repaired  the  damage  when  it  has  occurred,  and  thus  very  mate- 
rially aided  the  roads.  At  the  same  time  the  transportation  of  troops  and  military  stores 
produced  a  large  revenue  to  the  several  roads." — Senate  Journal,  1S63-J,  p.  21. 

^See  House  Journal,  /S6j,  Appendix,  pp.  647  and  653. 


128  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

tion."'  At  the  beginning  of  1863  "iron  was  being  laid  west 
of  Sedalia  "  and  the  grading  of  the  roadbed  was  progressing 
towards  Warrensburg.  The  payment  for  this  grading  was  made 
"half  in  Johnson  county  bonds  and  half  in  cash."  ^  Funds  for 
the  further  prosecution  of  the  work  were  not  in  sight  at  this 
time.  The  remainder  of  the  road  would  cost  much  less  per  mile 
than  any  part  already  completed,  because  this,  the  unfinished 
portion,  would  extend  through  a  comparatively  level  prairie 
country,  whereas  the  greater  part  of  the  finished  portion 
extended  through  a  rough  country,  demanding  a  great  amount 
of  excavation  of  "rock  and  hard-pan."  The  portion  between 
Sedalia  and  Syracuse,  a  distance  of  twenty-one  miles,  requiring 
the  excavation  of  some  rock  and  hard-pan,  had  been  built  for 
Si8,850per  mile;  and  the  estimate  for  the  remaining  ninety-four 
miles  was  only  ^18,223  per  mile,  or  gi, 713, 000  in  all. 3  This  was 
the  amount  of  funds  needed  by  the  company  for  the  completion 
of  the  road.  The  North  Missouri  Company  during  these  years 
was  not  able  to  extend  its  road  beyond  the  junction  with  the 
Hannibal  and  St.  Joseph.  In  fact  the  road  south  of  the  Hannibal 
and  St.  Joseph  was  not  yet  in  a  fully  completed  condition,  being 
deficient  in  depot  buildings,  water  stations,  rolling  stock  and 
"  many  other  things."  The  company  estimated,  however,  that 
"with  a  sum  of  one  million  dollars  of  first-mortgage  bonds  and 
the  surplus  earnings  of  the  roads  for  two  years,  the  road  could  be 
completed  and  equipped  with  rolling  stock  to  Iowa,"  and 
needed  improvements  be  made  on  the  road  "south  of  its  junc- 
tion with  the  Hannibal  and  St.  Joseph." "»  The  company  now 
also  contemplated  the  addition  of  an  extensive  branch  to  leave 
the  main  line  at  Moberly  in  Randolph  County,  to  pass  through 
Randolph  and  Chariton  counties  to  Brunswick  and  thence  on 
through  Carroll,  Ray,  Clay,  Platte  and  Buchanan  counties  to  St. 
Joseph,  a  distance  of  about  160  miles.''  The  right  to  issue  first- 
mortgage  bonds  would,  however,  necessitate  on  the  part  of  the 

■  Senate  Journal,  1867,  Appendix,  p.  877. 
'^  House  Journal,  1862-3,  Appendix,  p.  190. 
^Ibid,  pp.  191  and  195.  *  Ibid.,  p.  63. 


PROGRESS    AND    DRIFT    OF    AIDED    RAILWAY    ENTERPRISES        I  29 

State  the  releasing  of  her  first  Hen  and  the  acceptance  of  a 
second.  Some  two  years  prior  to  this  time  the  city  and  county 
of  St.  Louis  had  granted  the  company'  a  permanent  release 
from  the  payment  of  interest  on  the  ^1,250,000  formerly  sub- 
scribed to  the  stock  of  the  company,  upon  the  condition  that 
the  legislature  of  the  state  would  enact  such  measures  as 
would  enable  the  company  to  extend  the  road  to  the  Iowa 
line  and  to  construct  the  branch  road  to  St.  Joseph  as  con- 
templated.'' The  company  therefore  at  this  time  along  with 
the  Pacific,  importuned  the  state  for  aid  in  some  form  to  enable 
it  to  extend  its  road  to  the  Iowa  line.  The  company  added  as 
a  reason  for  asking  aid  that  a  road  had  been  chartered  in  Iowa 
to  extend  from  Des  Moines  to  the  state  line  of  Missouri,  where 
the  North  Missouri  Railroad  would  cross  the  line. 

The  importunities  of  these  companies  for  aid  touched  the 
pride  of  the  state,  and  aid  was  granted  in  what  may  be  called 
a  negative  form  by  the  act  of  February  10,  1864.^  The  state 
by  this  act  gave  both  companies  the  right  to  issue  their  own 
first  mortgage  bonds  to  given  amounts  and  allow  her  first  lien 
to  become  a  second  lien  to  the  amount  of  the  bonds  issued. 
The  Pacific  Company  was  granted  the  privilege  of  issuing 
^1,500,000  of  first  mortgage  bonds  on  that  part  of  its  road 
west  of  Dresden  in  Pettis  county,  the  state  taking  a  second  lien 
on  only  this  part  of  the  road,  but  reserving  the  first  lien  on  the 
remainder.  The  North  Missouri  obtained  the  privilege  of  issuing 
two  million  dollars  of  bonds,  to  be  applied  to  three  distinct  objects: 
( I )  one  million  dollars  to  that  part  of  the  road  north  of  the  Hanni- 
bal and  St.  Joseph  ;  (2)  $700,000,  to  the  extension  of  the  pro- 
posed branch  ;  and  (3)  $300,000  to  the  erection  of  abridge  over 
the  Missouri  River  at  St.  Charles.  Both  companies  were  granted 
the  right  to  issue  bonds  to  the  amount  of  the  state  bonds 
granted  to  them  for  the  purpose  of  exchanging  them  for  the 
bonds  of  the  state.  Whenever  any  of  the  state  bonds  should  be 
returned    to    the  state    by  this    exchange,  they  were   to   be   can- 

^  House  Journal,  1862-3,  Appendix,  p.  63. 

'^  Laws  of  Missouri,  Adjourned  Session,  1863-4,  p.  50. 


130     '  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

celed ;  and  to  the  amount  of  state  bonds  thus  returned  and 
canceled,  the  state  was  to  release  her  first  lien  on  the  railways 
in  favor  of  the  holders  of  the  bonds  of  the  respective  com- 
panies. The  proposed  branch  road  of  the  North  Missouri  con- 
sisted, in  the  beginning,  of  two  short  roads  already  partially 
constructed  by  two  separate  companies,  the  Chariton  and  Ran- 
dolph, and  the  Missouri  Valley,  both  operating  independently  of 
state  aid.  The  act  of  February  10  provided  for  the  transfer  of 
the  stock  of  these  two  companies  to  the  North  Missouri  Rail- 
road Company.  This  act  also  provided  that  all  the  net  earnings 
of  the  Pacific,  of  the  North  Missouri,  and  of  the  South  West 
Branch  should  be  applied  respectively  to  the  extension  of  the 
separate  roads.  The  Pacific  Railroad  Company  was  to  sell  the 
lands  of  the  South  West  Branch  as  speedily  as  possible  and 
apply  the  proceeds  to  the  extension  of  that  road.  The  obliga- 
tion was  laid  upon  the  company  to  complete  the  branch  between 
Rolla  and  the  mouth  of  the  Little  Piney,  twelve  miles,  within 
fourteen  months  from  the  passing  of  the  act. 

The  office  of  Fund  Commissioner,  the  duties  of  which  were 
in  some  respects  the  same  as  those  of  the  former  Board  of  Pub- 
lic Works,  was  also  established  by  the  act  of  February  10,  i86'4. 
The  report  of  the  Board  of  Public  Works  at  the  close  of  i860 
seems  to  have  been  its  last.  Why  the  board  was  discontinued 
cannot  be  learned  ;  and  it  is  especially  difficult  to  understand 
why  it  should  have  been  discontinued  just  at  the  time  when  its 
members  were  beginning  to  acquire  really  valuable  experience 
and  when  a  serious  crisis  had  arisen  in  the  progress  of  the  railway 
experiment.  It  is  certain  that  the  office  did  not  expire  by  statu- 
tory limitation  or  by  the  repeal  of  the  provision  of  the  act  of 
1855  creating  it.  This  act  provided  for  the  election  of  a  new 
board  every  four  years  ;^  none  was  elected,  however,  and  the 
Fund  Commissioners  when  appointed  were  appointed  for  only 
two  roads,  the  Pacific  and  the  North  Missouri.  In  addition  to 
the  duty  of  examining  the  "books,  papers,  and  accounts"  of 
these   two   companies,    the    Fund    Commissioners   were    also  to 

^Compilation  of  the  Laws  in  Reference  to  such  Railroads  Qic,  p.  77- 


PROGRESS    AND    DRIFT    OF    AIDED    RAILWAY    ENTERPRISES        I3I 

report  annually  to  the  governor  the  condition  of  the  roads,  and 
to  call  the  attention  of  the  governor  at  any  time  to  any  "irregu- 
larities" in  the  operations  of  the  companies.'  But  the  work  of 
overseeing  was  not  the  chief  work  of  the  Fund  Commissioner. 
It  was  made  his  duty  to  negotiate  the  special  issues  of  bonds 
authorized  by  the  act  and  to  receive  the  funds  for  them.  He 
was  even  made  in  all  essential  respects  the  treasurer  of  the 
railway  company  with  which  he  had  to  deal.  He  was  to  receive 
all  gross  earnings  of  the  roads  "daily,"  to  have  "control" 
of  all  revenues  arising  from  "all  other  sources,"  and  to  deposit 
the  same  in  a  bank  named  for  the  purpose  ;  and  to  complete  the 
duties  of  the  de  jure  treasurer  thus  imposed  upon  the  railways 
by  the  state  it  was  made  his  duty  to  pay  out,  upon  proper 
vouchers,  the  funds  which  had  come  into  his  possession  for  the 
construction,  extension,  equipment  and  operation  of  the  railway  for 
which  he  was  appointed.  Inasmuch  as  the  duty  of  the  Fund  Com- 
missioners in  guarding  the  interests  of  the  state  through  the 
right  of  general  supervision  and  report  did  not  extend  to  any  of 
the  railways  in  the  state  except  the  Pacific  and  the  North  Mis- 
souri, all  the  other  companies  aided  by  the  state,  since  the 
Board  of  Public  Works  had  now  fallen  into  disuse,  were  bound 
only  by  the  general  corporation  law,  which  required  all  railway 
corporations  to  make  annual  reports.  Such  reports  were  either 
not  always  made,  or  they  were  not  published  as  was  formerly 
the  custom  ;  accordingly  the  information  to  be  got  from  reports 
published  between  1861  and  1868  is  decidedly  scrappy. 

The  Pacific  Railroad  Company,  as  we  have  seen,  obtained 
the  right  in  February  1864  to  issue  its  first-mortgage  bonds  on 
that  portion  of  its  road  between  Dresden  (Pettis  county)  and 
Kansas  City.^'  In  December  of  the  same  year  1.3  million  dol- 
lars of  such  bonds  had  been  negotiated  at  par  and  the  company 
was  proceeding  "in  a  most  satisfactory  manner  to  the  comple- 
tion of  the  road"  when  General  Price  destroyed  "all  the  large 
bridges"  of  the  road,  and  thus  for  the  time  being  "put  an  end 

^  Laws  of  Missouri,  1862  (act  of  February  lo,  sees.  7  and  8),  p.  50. 
^^See  above,  p.  129. 


132  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

.  ...  to  all  further  prosecution  of  the  work."'  Moreover,  at 
this  time  the  treasury  of  the  company  was  empty  and  the  direc- 
tors "were  despairing."^  Funds  must  be  found  for  the  comple- 
tion of  the  last  division  of  the  road,  which  would  establish  rail- 
way connection  between  St.  Louis  and  Kansas  City.  There 
seemed  to  be  only  one  or  two  sources  from  which  help  could  be 
expected.  St.  Louis,  city  and  county,  had  already  extended 
aid  to  the  various  railway  companies  to  the  amount  of  $5,450,- 
000,3  exclusive  of  amounts  subscribed  by  individuals  in  the  city 
and  county,  which  in  1863  were  estimated  at  hundreds  of  thou- 
sands of  dollars.  It  might  be  recalled  here  that  1.2  million  dol- 
lars subscribed  to  the  Pacific  Railroad  Company  at  one  time  by 
the  county  court  of  St.  Louis  county  was  made  in  the  summer 
of  1854  when  the  company  was  in  very  great  need.  Moreover 
the  city  had  also  shown  its  appreciation  of  the  facilities  to  be 
afforded  by  the  completion  of  the  St.  Louis  and  Iron  Mountain 
Railroad  to  Pilot  Knob  in  releasing  that  road  from  the  further 
payment  of  interest  upon  its  completion  April  1858.'*  And 
again,  it  was  about  the  time  that  the  roads  were  beginning  to 
default  in  their  interest  payments  that  the  resolution,  already 
mentioned,  was  passed  by  the  city  and  county  of  St.  Louis  to 
release  the  North  Missouri  Railroad  from  all  further  pay- 
ments of  interest  in  case  the  state  would  pass  such  legislation 
as  would   enable   the   company   to    extend   its  road  to  the  Iowa 

'Message  of  retiring  governor,  December  1864,  House  Journal,  1863,  p.  25. 

^Senate  Journal,  rSby,   Appendix,  p.  878. 

By  the  county  By  the  city 

3    To  the  Pacific  R.  R.  Company         ^500,000  §500,000 

"       Pacific  R.  R.  Company         1,200,000  

"      North  Missouri  R.  R.  Co.        500,000  500,000 

"       North  Missouri  R.  R.  Co.        750,000  

"       St.  L.  and  I.  M.  R.  R.  Co.      500.000  

"   St.  L.  and  I.  M.  R.  R.  Co.   500,000  500,000 

$3,950,000   §1,500,000 

§5,450,000 

See  Senate  Journal,  Adjourned  Session,  1863-4,  Appendix,  p.   697  ;    House  Jour- 
nal, Adjourtied  Session,  18,56-7,  Appendix,  pp.  256  and  301. 
"■  House  Journal,  / 860-1,  Appendix,  p.  486. 


PROGRESS    AND    DRIFT    OF    AIDED    RAILWAY    ENTERPRISES        I  33 

line.'  And  now  once  again  at  this  time  of  need  the  county  of 
St.  Louis,  anxious  to  have  the  Pacific  Railroad  completed  to 
the  western  boundary  of  the  state,  came  to  the  resoue  by  grant- 
ing the  company  a  further  issue  of  bonds  to  the  amount  of 
5700,000.  This  amount  made  in  all  $6,150,000  contributed  by 
the  city  and  county  of  St.  Louis  to  the  railway  enterprises  of 
Missouri.^  By  the  help  of  this  assistance  the  Pacific  Company 
was  enabled  to  begin  work  again  in  March  1865  and  to  make 
steady  progress  during  the  summer,  reaching  Independence  on 
the  igth  of  September.  The  road  from  Kansas  City  to  Inde- 
pendence had  already  been  in  operation  for  some  months.  On 
the  following  day,  September  20,  1865,  "the  first  passenger 
train  passed  over  the  whole  line  of  the  road,  leaving  Kansas 
City  at  3  A.M.  and  getting  to  St.  Louis  at  5  p.m.  of  the  same 
day."  3 

The  whole  line  of  the  South  West  Branch,  from  Franklin  to 
Rolla  (seventy-seven  miles),  was  completed  December  22, 
1860,"  or  before  the  breaking  out  of  the  war.  From  this  time 
up  to  November  1865  very  little  work  was  done  ;  a  section  of 
twelve  miles  west  of  Rolla  had  been  graded,  a  further  portion  of 
twenty  miles  partially  graded,  and  two  tunnels  had  been  partly 
cut  ;  the  cost  of  the  whole  aggregating  ;g546,852.5 

The  North  Missouri  was  not  able  to  negotiate  at  par  any  of 
its  first-mortgage  bonds  (two  million  dollars)  authorized  by  the 
act  of  February  10,  1864,  "and  the  governor  would  not  consent 
to  their  negotiation  at  a  less  rate."  This  being  the  case,  the 
company  asked  the  state,  December  1864,  to  allow  the  bonds 
to  be  canceled,  and  to  give  the  company  the  right  to  issue  a 
larger  amount,  that  thereby  it  might  get  funds  to  complete  the 
main  line  of  the  road  and  the  branch  already  mentioned.^  The 
truth  was  that  the  company  had    done  practically  nothing  in  the 

^  Senate  Journal,  1863-4,  Appendix,  p.  63. 

-Ibid.,  iSd^,  p.  878,  and  House  and  Senate  Journals,  1868,  Appendix,  p.  220. 

'^  Senate  Journal,  1867,  Appendix,  p.  878. 

''House  Journal,  1860-1,  Appendix,  p.  444. 

=  Governor's  Message,  Senate  Journal,  Adjoztrned  Session,  /86j~6,  p.  12. 

*  Governor's  Message,  House  Journal,  186^,  p.  25  and  Appendix,  p.  6t2. 


134  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

way  of  extending  its  road  since  1859.  In  1865  it  reported  that 
twelve  and  three-quarter  miles  were  graded  north  of  the  junction 
with  the  Haiinibal  and  St.  Joseph,  that  surveys  had  been  made 
to  the  Iowa  line,  and  that  a  good  deal  of  the  right  of  way  was 
already  obtained.  The  only  resources  for  the  construction  of 
this  part  of  the  road  were  the  subscriptions  of  $35,000  in  each 
of  the  two  counties  of  Schuyler  and  Adair,  which  the  counties 
were  "  ready  to  pay  "  whenever  the  work  of  construction  should 
be  begun.'  Nor  were  funds  more  plentiful  for  the  construction 
of  the  west  branch.  Should  this  branch  be  extended  from 
Moberly,  on  the  main  line,  to  St.  Joseph,  by  way  of  Richmond 
(Ray  county)  and  Plattsburg  (Clinton  county),  its  length  would 
be  150  miles,  or  if  it  should  be  extended  from  Richmond  to  a 
point  on  the  Missouri  River,  opposite  Leavenworth,  and  thence 
to  Weston  (Platte  county),  where  connection  would  be  made 
with  the  Platte  Country  ^  Railroad,  running  to  St.  Joseph,  the 
length  would  be  about  150  miles.  However,  the  distance  from 
Weston  to  St.  Joseph  was  thirty-seven  miles  ;  and  therefore  by 
this  route  the  distance  from  Moberly  to  St.  Joseph  would  be  187 
miles.  Even  if  the  shortest  route  for  the  west  branch  were 
selected,  this  with  the  sixty  miles  of  the  main  line  to  be  built 
would  make  210  miles  of  railway  yet  to  be  constructed  by  the 
North  Missouri  Company.  The  resources  for  both  of  the  pro- 
posed routes  for  the  west  branch  being  of  an  almost  wholly  pro- 
spective nature,^  as  were  indeed  those  for  the  unfinished  portion 

'^  House  Jotirnal,  i8b^.  Appendix,  p.  612. 

^"County"  changed  to  "country"  by  special  act,  Zarw  of  Missouri,  /86j,  p.  107. 

3 The  estimated  cost  of  the    150  miles  of  railway  by   either   route  was  4.5  million 

dollars,  or  $30,000  per  mile.     The   available   and  prospective  funds  for  the  route   by 

Plattsburg,  are  given  below  ;  those  of  the  longer  route,  by  Richmond  and  Weston,  were 

only  slightly  larger  than  these.     The  available  founds  and  resources  were  : 

25,000  acres  of  land  in  Chariton  county,  $1  per  acre  -         -         $  25,000 

Fifteen  miles  of  grading  done,  valued  at      -         -         -         -         -         75,000 

Subscription  in  Carroll  county  ......  175,000 

Subscription  in  Ray  county  ..-...-       200,000 

The  prospective  funds  consisted  of  possible  subscriptions  in  Clinton 
and  Buchanan  counties   and  in  the  city    of    St.  Joseph,  aggre- 
gating       ------...-  400,000 

— See  House  Journal,  i86j,  Appendix,  p.  614. 


PROGRESS    AND    DRIFT    OF    AIDED    RAILWAY    ENTERPRISES        I  35 

of  the  main  line,  the  company  thought  that  the  state  should 
grant  $3,575,000  of  aid  to  it;  and,  to  be  on  the  safe  side, 
decided  to  ask  the  state  to  furnish  a  round  four  million  dollars.' 
The  company  again  brought  forward  as  an  argument  for  aid  the 
fact  that  the  people  of  Iowa  were  greatly  interested  in  a  road  to 
be  built  from  Ottumwa,  Iowa,  to  the  state  line  of  Missouri,  at 
the  point  where  the  North  Missouri  Railway  would  cross  the  line. 
About  this  time,  in  fact,  the  people  of  this  section  of  Iowa  sent  a 
deputation  to  visit  the  chamber  of  commerce  in  St.  Louis,  and 
also  the  legislature  of  the  state,  in  order  to  arouse  the  people  of 
Missouri  to  the  realization  of  the  necessity  of  completing  the 
North  Missouri  Railway.^  Again  the  company  urged  that  the 
West  Branch  ought  to  be  completed  so  as  to  act  as  a  competitor 
with  the  Hannibal  and  St.  Joseph  Railroad  between  St.  Louis  and 
the  western  part  of  the  state.  As  matters  then  stood,  the  North 
Missouri  was  not  only  not  capable  of  competing  with  the  Han- 
nibal and  St.  Joseph,  but  it  could  not  demand  what  it  regarded 
as  its  just  rights.  And  if  the  rates  given  by  the  North  Missouri 
company  were  the  rates  actually  charged  by  the  North  Missouri 
and  the  Hannibal  and  St.  Joseph  at  this  time,3  it  seems  that  the 
latter  made  good  use  of  the  monopoly  privileges  which  it  cer- 
tainly possessed.  However,  the  trouble  arising  between  the 
Hannibal  and  St.  Joseph  and  the  North  Missouri,  was  not 
always  so  much  a  question  of  cut-throat  competition  as  one  of 
the  incapacity  of  the  Hannibal  and  St.  Joseph  to  do  all  the 
business  offered  to  it.  In  arguing  for  further  aid,  January  1865, 
the  North  Missouri  Company  states  that  "the  past  two  seasons 

^  House  Journal,  /86s,  Appendix,  p.  614. 

"^  Ibid.,  p.  629. 

3  It  will  be  recalled  that  the  acts  granting  land  to  railway  companies  in  the  state 
contained  the  condition  that  the  railways  thus  aided  should  carry  troops  and  property 
for  the  United  States  free  of  any  toll  whatever  as  a  consideration  for  the  land  grant. 
However,  when  the  war  broke  out  the  companies  found  that  such  an  arrangement 
would  soon  render  them  bankrupt ;  so  they  sent  a  deputation  to  Washington  [House 
Journal,  i86s.  Appendix,  p.  622),  which  prevailed  upon  Congress  to  pass  a  resolution 
allowing  them  to  charge  such  rates  upon  government  freight  as  the  companies  in  con- 
junction with  the  secretary  of  war  might  deem  just  and  reasonable.  [House  Journal 
of  Missouri,  /86j,  Appendix,  p.  647.)     It  will  also  be  recalled  that  the  North  Missouri 


136 


STATE    AID    TO    RAILWAYS    IN    MISSOURI 


show  that  one  road  is  wholly  incapable  of  accommodating  the 
business  flowing  to  and  from  points  to  be  reached  ^y  the  West 
Branch."  Great  loss  to  stock  men  in  hogs  had  "occurred  on 
this  account  during  the  past  two  seasons.  And  private  [as  dis- 
tinguished from  government]  freight  from  St,  Louis  by  the 
North  Missouri  route  and  thence  by  the  Hannibal  and  St.  Joseph 
road  could  not  be  taken  with  any  reasonable  dispatch "  that 
w^inter.      For  a  considerable  time  private  freight  from  the  North 

was  not  one  of  the  railways  to  which  land  was  granted.     The  following  is  a  compari- 
son of  rates  charged  on  the  North  Missouri,  Hannibal  and  St.  Joseph  and  the  Pacific  : 
(i)  Rates  per  car  per  mile  : 


Hannibal  and  St.  Joseph  (between   Hannibal 

.   &St.J.) 

Hannibal  &    St.  Joseph  (between    Hannibal 

&  Macon) 

North     Missouri     (between    St.    Louis    and 

Macon) 

At  the  rate  of  $75  for    170  miles  the  charge 

for  135  miles  on  the  North  Missouri  would 

be 


0 

0. 
u 
a 

"a 
0 
0 

206 

^90 

135 

80 

170 

75 

60 

Oj   fc-   ^H  .n 
^  u  oj  5 

>.       in       tU) 
•o  V  ta)0.> 

kH      U  4.1 

.,   U   D  »-    C 

£  >'a  c  « 

rt    O    <U    It    ^- 

gj  aj'O  o  an 


>ii4-75 
61 .20 

31-50 
25 


O 

Cm  i 


^ 


»24.75 


e 

a 

u 

o 
tst 


O   ^4 


18.80 


43  50 


35 


35 


34 


(2)  Rates  per  100  pounds  :  Cents 
By  river,  St.  Joseph  to  Hannibal            -         -         -         -         -     22 
By  Hannibal  and  St.  Joseph,  from  Hannibal  to  St.  Joseph  63^ 
Total  rate  by  this  combination  river  and  rail  route,  St.  Louis 

to  St.  Joseph  --------- 

By  the  North  Missouri,  St.  Louis  to  Macon 

By  the  North  Missouri  (if  built),  Macon  to  St.  Joseph,  at  same 

rate 

Total  rate  by  this  route,  only  partially  constructed,  however 
Difference  in  favor  of  the  North  Missouri,  for  cheapness 

(3)  Rates  on  different  classes  of  goods  per  100  pounds  : 

ist  class 
On  the  South  West  Branch  (B.  R.   R.),  St.  Louis  to    cents 

Rolla,  113  miles         ------     47 

On  the  North  Missouri,  for  the  same  distance,  at  rates 

in  notes  (i)  and  (2)  above         -  -  .  .  22.6 

On  the  Hannibal  and  St.  Joseph        -         -         -         -     34 

— See  House  Journal,  r86j.  Appendix,  pp.  617  et  seq. 


69 
16^ 

2d  class 
cents 

3d  class 
cents 

35 

25 

22.6 

22.6 

34 

34 

PROGRESS    AND    DRIFT    OF    AIDED    RAILWAY    ENTERPRISES        I  37 

Missouri  at  Macon  (the  point  of  junction  with  the  Hannibal  and 
St.  Joseph)  was  refused  by  the  Hannibal  and  St.  Joseph,  and 
this  of  course  compelled  the  North  Missouri  to  decline  taking  it 
at  St.  Louis.  The  North  Missouri,  though  thus  handicapped, 
was  able  to  do  its  gov^ernment  and  other  business  with  "a  toler- 
ably reasonable  dispatch,"  whilst  the  Hannibal  and  St.  Joseph 
road,  possessing  more  than  double  the  number  of  the  cars  and 
engines,  found  itself  entirely  unable  to  do  the  business  offered  to  it.' 
Although  the  North  Missouri  Company  had  not  been  able  to 
negotiate  any  of  the  two  million  dollars  of  bonds  authorized  by 
the  act  of  February  10,  1864,  it  now  asked  of  the  state  the  priv- 
ilege of  issuing  six  million  dollars  of  first-mortgage  bonds,  and 
that  the  state  should  take  a  second  lien  on  the  road  for  the  amount 
which  the  company  owed  the  state.  The  president  of  the  com- 
pany regarded  this  as  the  only  means  by  which  the  funds  could 
be  raised.^  The  state  again  yielded;  the  act  of  February  16, 
1865,  was  passed,  giving  the  company  the  right  to  issue  six 
million  dollars  of  first- mortgage  bonds  bearing  7  per  cent,  inter- 
est and  running  thirty  years. ^  Although  these  bonds  did  not 
meet  with  a  ready  market  the  company  was  able  during  the 
ensuing  summer  to  have  a  portion  of  the  West  Branch  of  the 
road  between  Moberly  and  Brunswick  (forty  miles)  "  in  course 
of  active  construction,"'*  and  also  to  begin  the  building  of  the 
bridge  across  the  Missouri  at  St.  Charles. 

'  In  answer  to  the  rumor  that  the  refusal  of  the  Hannibal  and  St.  Joseph  to  take 
the  private  freight  of  the  North  Missouri  was  due  to  the  fact  that  the  government  was 
giving  the  North  Missouri  a  larger  amount  of  shipments  than  the  proportions  formerly 
granted  to  it  and  to  the  Hannibal  and  St.  Joseph,  the  general  freight  agent  of  the 
North  Missouri  says  :  "Colonel  Hayward  [superintendent  of  the  Hannibal  and  St.' 
Joseph]  assured  me  such  was  not  the  fact,  and  that  it  was  simply  because  of  the  total 
inability  to  accommodate  the  business  offered  this  road,"  and  appends  the  following 
communication  from  the  superintendent : 

"We  shall  give  freight  from  your  road  as  good  a  'show'  as  [freight]  from  Chi- 
cago. We  have  freight  from  there  waiting  shipments  six  months  now  and  they  have 
stopped  shipments  there  entirely  for  near  (sic)  a  month.     Yours  truly, 

J.  T.  K.  Hayward." 
— See  House  Journal,  1865,  Appendix,  p.  617. 

^  House  Journal,  iSbj,  Appendix,  p.  631.  3  Laws  of  Missouri,  1865,  p.  91. 

••  Message  of  retiring  governor.  House  Journal,  1865,  p.  25. 


138  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

The  work  of  construction  on  the  Platte  Country  Raih'oacl ' 
was  begun  in  1859,  and  at  the  close  of  the  war  fifty-one  and  a 
half  miles  had  been  built,  connecting  Savannah  and  Weston. - 
There  thus  remained  about  1 1 5  miles  to  be  built  in  order  to 
establish  connection  between  the  northern  boundary  of  the  state 
and  Kansas  City.  On  this  remaining  part  the  grading  and 
masonry  were  nearly  completed  between  Savannah  and  Forest 
City,  a  distance  of  twenty-two  and  a  half  miles.  By  purchasing 
the  right  of  way  of  two  smaller  railway  companies,  the  Weston 
and  Atchison  and  the  Atchison  and  St.  Joseph,  whose  roads 
would  form  portions  of  the  general  route  of  the  Platte  Country 
Railroad,  and  upon  which  some  grading  had  been  done  prior  to 
1859,3  the  Platte  Country  Railroad  Company  had  gained  some 
time.  However,  the  construction  of  only  fifty-one  and  a  half 
miles  on  this  road  between  1859  and  1866,  through  territory 
which  offered  very  few  obstacles  to  rapid  construction,  if  only 
proper  management  were  brought  to  bear  upon  the  work,  indi- 
cated that  the  road  would  be  a  long  time  in  building,  and  that 
the  debt  (^700,000)  incurred  by  the  state  to  assist  the  com- 
pany was  in  danger  of  not  being  repaid.  Concerning  the 
management  of  the  road,  and  particularly  of  that  portion  south 
of  St.  Joseph,  whose  earnings  were  said  to  be  "very  large,"'* 
more  will  be  said  in  the  future. ^ 

On  the  Cairo  and  Fulton  practically  no  work  had  been  done 
since  the  beginning  of  the  war.  On  December  12,  i860,  there 
were  in  operation  twenty-six  and  a  half  miles  of  this  road ;  on 
an  additional  nine  miles  "  about  two-thirds  of  the  work  had  been 
done "  to  prepare  it  for  the  cars,  and  on  eighteen  miles  more 
some  "clearing  had  been  done  ; "  ^  in  1866,  however,  only 
thirty-seven  miles  were  in  operation. ^  No  extension  had  been 
made  of  the  St.  Louis  and  Iron  Mountain  since  1859. 

'  "  County"  changed  to  "  country  "  by  special  act,  Laws  of  Missouri,  iSdj,  p.  107. 

"Ibid.,  p.  26. 

3  Message  of  retiring  governor.  House  Journal,  186^,  p.  25.  ^  Ibid. 

5  See  below,  chapter  v. 

^  House  Jou7-nal,  / 860-1,  Appendix,  p.  347. 

T  Senate  Journal,  1S67,  Appendix,  p.  882. 


PROGRESS    AND    DRIFT    OF    AIDED    RAILWAY    ENTERPRISES        I  39 

To  sum  up,  it  appears  that,  since  the  breaking  out  of  the 
Civil  War,  only  112  miles  of  railway  had  been  built,  of  which 
amount  ninety-four  miles  were  on  the  Pacific,  eleven  and  a  half 
miles  on  the  Cairo  and  Fulton,  and  seven  and  a  half  on  the 
Platte  Country.' 

§  7.  The  state  now  had  914.2  miles  of  railway  for  which  she 
had  contracted  a  debt  of  $23,701,000,  upon  which  both  the  rail- 
way companies  and  the  state  had  failed  to  pay  interest,  barring 
some  small  amounts,  since  January  1861.  Adding  to  this  amount 
the  interest  which  had  accrued  between  this  time  and  January  i, 
1867,  and  the  "Revenue"  bonds  issued  to  secure  funds  for 
paying  interest  on  the  railway  bonds,  we  find  the  total  debt  of 
the  state  January  i,  1867,  to  be  $31,855,940.  If  to  this  sum  the 
amount  of  interest  already  paid  by  the  state  be  added,  the  total 
cost  of  the  railways  amounts  to  $33,417,887.  However,  this 
large  amount,  it  must  be  understood,  contains  nothing  for 
expenses  for  administration  on  the  part  of  the  state,  such  as 
salaries  for  members  of  the  Board  of  Public  Works,  for  inves- 
tigating committees,  and  the  like.  Not  including  these  amounts, 
the  cost  of  the  railways  to  the  state  in  cash  actually  paid  out  and 
in  bonds  issued  amounted  to  $36,340  per  mile.  For  the  payment 
of  this  debt,  however,  there  existed  at  this  time  a  joint  respon- 
sibility in  which  the  railway  companies  were  the  principals  and 
the  state  the  endorser. 

Name  of  railway  Points  connected  in  1866 

'  Pacific  (St.  Louis  and  Kansas  City)         -         .         -         . 
South  West  Branch  (Franklin  and  RoUa)     - 
Hannibal  and  St.  Joseph  (Hannibal  and  St.  Joseph)  - 
North  Missouri  (St.  Louis  and  Macon,  ferry  at  St.  Charles) 
St.  Louis  and  Iron  Mountain    (St.   Louis  and  Pilot  Knob, 

with  Potosi  branch) 
Cairo  and  Fulton  (Bird's  Point  and  Buffington) 
Platte  Country  (Savannah  and  Weston,  via  St.  Joseph)  - 

694.7  802.2  914.2 

See  House  and  Senate  Jotwnah,  Adjourned  Session,  1859-60,  Appendix,  pp.  5~I4; 
1S60-1,  pp.  332-343;  and  Senate  Journal,  1S67,  Appendix,  p.  882. 


Miles  in 

1859 

i860 

1866 

168 

189 

283 

47 

77 

77 

206.8 

206.8 

206.8 

168.75 

168.75 

168.75 

90.15 

90.15 

90.15 

25 

26.5 

37 

7 

44 

51-5 

CHAPTER  V. 

THE    CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID. 

1866-1868. 

i^  I.  After  the  close  of  the  war  it  was  natural  to  suppose  that 
through  the  revival  of  trade  some  of  the  railway  companies  in 
default  would  be  enabled  to  resume  the  payment  of  their  interest 
dues.  Just  a  short  time  prior  to  the  close  of  the  war  Governor 
Fletcher,  upon  assuming  his  ofifice,  declared  that  the  railways 
were  "ample  security  for  the  amounts  advanced  to  them 
respectively."  He  further  said :  "If  ....  we  cannot  com- 
mand the  means  for  the  completion  of  the  roads,  and  ....  if 
they  cannot  be  made  to  yield  at  least  a  portion  of  the  accruing 
interest  on  the  bonds  loaned  to  them  respectively  with  reasonable 
prospects  of  their  completion  or  [of]  increased  earnings  enabling 
them  to  meet  the  whole  interest,  then  it  will  be  our  duty  in  order 
to  restore  the  credit  of  the  state  and  to  save  the  people  from 
burdensome  taxation  to  foreclose  our  first  mortgage  liens  on 
them  and  by  their  sale  reduce  the  debt  to  a  sum  within  our  easy 
control;"  and  if  private  enterprise  fails  "  to  furnish  the  means 
for  their  completion,"  we  must  trust  to  our  "future  prosperity" 
[as  a  state]  to  do  so.'  It  will  be  seen  later  that  some  of  the 
roads  after  the  close  of  the  war  gave  sufficient  evidence  in  the 
form  of  net  earnings  that  they  could  meet  the  whole  of  their 
interest  dues,  but  that  the  companies  did  not  choose  to  use  their 
net  earnings  for  this  purpose.  The  important  fact  is  that  all  of 
the  companies  aided  by  the  state,  except,  of  course,  the  Hannibal 
and  St.  Joseph,  which  had  never  been  in  default,  remained  in 
default  after  the  revival  of  trade,  which  followed  the  close  of  the 
war.  Consequently  the  state  authorities  took  action  looking  to  a 
reduction  of  the  state  indebtedness  by  a  disposal  of  the  railways. 

^  House  Journal,  1863,  p.  53. 

140 


C{;NCLUS10N    OF    THE    EXPERIMENT    OF    STATE    AID  I4I 

§  2.  Already  at  the  adjourned  session  of  the  legislature  of 
1863-4,  the  first  of  the  preliminary  attempts  to  dispose  of  some 
of  the  railways,  and  thus  to  reduce  the  indebtedness  of  the  state, 
had  been  made.  The  only  measure  passed  at  this  session,  how- 
ever, was  that  to  secure  the  completion  of  the  Pacific,  the  North 
Missouri,  and  the  South  West  Branch.  This  has  already  been 
considered.'  There  was  some  opposition,  however,  to  the  feeling 
then  becoming  quite  general  that  the  roads  should  be  sold.  The 
citizens  of  Chariton  county  passed  a  resolution  in  a  memorial  to 
the  general  assembly  that  that  body  should  "oppose  any  and  all 
sell-out  policy."''  The  St.  Louis  common  council  passed  res- 
olutions addressed  to  the  legislature  of  the  state,  protesting 
against  all  propositions  for  the  sale  of  the  Pacific,  the  North 
Missouri,  and  the  Iron  Mountain.^  On  the  other  hand,  1665 
citizens  of  St.  Louis  county  sent  up  a  memorial  "in  favor  of 
the  sale  of  the  railroads  of  the  state.""  At  this  time  also 
memorials  came  in  from  several  other  counties  favoring  the  pas- 
sage of  such  legislation  as  would  secure  the  completion  of  the 
railways  ;  on  this  latter  point  all  parties  were  agreed  ;  the  lines 
should  be  finished. ^  The  effect  of  the  opposition  to  an  outright 
sale  of  the  railways  to  the  highest  bidder  is  seen  in  the  act  of 
February  12,1 864,  "  ordering  the  sale  of  the  Platte  Country  Rail- 
road,"^ in  the  fact  that  it  was  provided  that  if  the  road  could  not 
be  sold  for  the  amount  of  bonds  and  interest  owing  by  the  com- 
pany to  the  state,  the  governor  was  to  purchase  the  road  and 
appoint  agents  to  operate  it.  This  was  the  first  of  the  acts  passed 
by  the  legislature  to  rid  the  state  of  her  unprofitable  railway 
enterprises.  The  Platte  Country  road  was  duly  advertised  and 
sold  at  auction  September  5,  1864,  in  St.  Joseph,  and  the  state 
became  the  purchaser  for  the  sum  of  §847,000,  an  amount  about 
equal  to  the  bonds  loaned  and  interest  due  on  them.^  It  will  be 
recalled  that  this  road  was   built  in    part  upon  the  routes  of  two 

'  See  above,  chapter  iv. 

-  Senate  Journal,  Adjourned  Session,  JS6J-4,  Appendix,  p.  128. 

'ilbid.,  p.  707.  '■Ibid.,\i.  706. 

^  Ibid.,Y>p.  27,  29,  30,  125,  and  126.  ^  Laws  of  Missouri,  1863-4,  p.  58. 

T  Auditor  s  Report,  1883-4,  Fart  2.  p.  91. 


142  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

shorter  railways.  About  thirty  days  prior  to  the  time  of  the  sale 
just  mentioned,  the  directors  of  the  company  "discovered"  that 
the  deed  of  transfer  by  which  the  Platte  Country  Railroad  in 
1859  got  control  of  the  two  shorter  roads,  the  Weston  and  Atchi- 
son and  the  Atchison  and  St.  Joseph,  was  not  of  the  required 
legal  form.  As  this  fact  in  the  eyes  of  the  directors  rendered 
the  transfer  null  and  void,  and  thereby  established  the  ownership 
of  the  road  in  the  two  former  companies,  they  retransferred  this 
road  to  the  two  older  companies,  notwithstanding  the  fact  that 
three  and  a  half  miles  of  the  road  between  Atchison  (Kansas) 
and  St.  Joseph  had  never  belonged  to  the  Atchison  and  St. 
Joseph  Railroad  Company  which  now  acquired  possession  of  it.' 
On  this  account  the  state  was  left  with  only  that  portion  of  the 
road  north  of  St.  Joseph  —  the  part  which  yielded  no  revenue.^ 
The  management  which  now  controlled  that  part  of  the  road 
south  of  St.  Joseph  was  of  a  blood-sucking  character,  and  under 
such  management  the  road  was  not  likely  to  earn  anything  for 
the  payment  of  interest ;  by  virtue  of  trying  to  keep  up  the  show 
of  two  companies  this  portion  of  the  road,  only  thirty-seven 
miles  in  length,  supported  a  double  set  of  superior  ofificers,  draw- 
ing salaries  annually  amounting  to  ^21,800.3  Further  attempts  at 
a  settlement  between  the  companies  and  the  state  were  made. 
The  act  of  February  18,  1865,  was  passed  as  a  compromise  for 
the  purpose  of  effecting  a  settlement ;  by  the  terms  of  this  act 
the  state  would  yield   all   claims   to  the  road   in  case  the  com- 

'  Message  of  retiring  governor,  House  Journal,  1865,  p.  26.  '^  Ibid.,  p.  25. 

3  Jas.  A.  Burns,  Pres.  W.  and  A.  R.  R.  Co. if3,ooo 

Geo.  W.  Belt,  Secretary  --...-.         1,000 

D.  D.  Burns,  Treas.    ---------     1,000 

John  Donophan,  Attorney        -------  1,000 

B.  F.  Stringfellow,  Pres.  A.  and   St.  J.  R.  R.  Co.         -         -         -     3,000 
A.  G.  Otis,  Treas.  -         -         -         -         -         -         -         -         -         1,000 

J.  M.  Price,  Attorney  --------     1,000 

D.  Carpenter,  Jr.,  Supt.  A.  and  St.  J.  and  W.  and  A.  R.  R.  companies     6,000 

D.  Kellogg,  Gen'l  Fr't  Agent 3,ooo 

Sam.  W.  Clapp  (office  not  given) 1,800 

21,800 
— See  message  of  retiring  governor,  House  Journal,  1865,  p.  27. 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  1 43 

panics  would  pay  into  the  treasury  of  the  state  the  sum  of 
$434,000  in  four  installments  at  different  periods  between 
January  i,  1866,  and  January  i,  1875,  and  a  further  like  sum 
in  two  installments  in  a  shorter  period.'  The  sum  (S868,000) 
thus  asked  for  the  road  was  equal  to  the  bonds  loaned  ($700,- 
000)  and  simple  interest  on  the  same  at  6  per  cent,  for  the 
time  that  had  elapsed  since  January  i,  1861,  the  date  of  the 
last  payment  of  interest.  The  companies  accepted  the  offer, 
but  failing  to  meet  the  first  installment  January  i,  1866,^  the 
Platte  Country  Railroad  was  included  among  the  railways  to  be 
sold  by  the  act  of  February  ig,  1866,  the  first  comprehensive  act 
])assed  for  the  purpose  of  disposing  of  a  number  of  defaulting 
railways. 3 

§  3.  By  the  act  of  February  19  the  legislature  did  not,  however, 
succeed  in  securing  a  final  settlement  in  the  case  of  any  one  of  the 
roads  with  which  it  dealt.  The  aim  of  the  act  was  to  secure  the 
early  completion  of  the  Platte  Country,  the  South  West  Branch, 
the  St.  Louis  and  Iron  Mountain,  and  the  Cairo  and  Fulton. 
To  attain  this  end  the  lien  of  the  state  was  to  be  foreclosed  and 
the  sale  of  the  roads  provided  for.  The  sale  of  the  four  railways 
just  mentioned  was  to  be  effected  through  a  board  of  three  com- 
missioners appointed  for  each  railway  by  the  governor  of  the 
state.  The  commissioners  after  advertising  the  railways  for  a 
specified  length  of  time  were  to  attend  the  sales  and  dispose  of 
the  railways  to  the  "highest  and  best  bidders,"  or  to  bid  them  in 
for  the  use  and  benefit  of  the  state  for  an  amount  not  exceeding 
the  respective  liens.  If  the  commissioners  bought  in  any  of  the 
roads  they  were  to  manage  and  operate  them  and  make  further 
attempts  at  a  final  disposition.  In  case  of  the  South  West 
Branch  and  of  the  St.  Louis  and  Iron  Mountain  the  purchasers, 
if  other  than  the  commissioners  of  the  state,  would  be  under 
obligations    to    expend   annually   $500,000    in    the    extension  of 

'^  Laws  of  Mis  sou  ri,  /86j,p.g8. 
'Auditor's  Report,  18S3-4,  Part  2.  p.  93. 
'^  La7us  of  A  Missouri,  1863-6,  p.  107. 


144  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

each  till  completed.  A  limit  to  the  time  in  which  the  railways 
were  to  be  completed  was  also  set ;  the  South  West  Branch  was 
to  be  extended  to  a  point  near  Lebanon  in  Laclede  county  in 
three  years,  to  Springfield  in  four  years,  and  to  the  western 
boundary  of  the  state  in  five  years  from  the  date  of  sale.  The 
Iron  Mountain  was  to  be  extended  to  the  Cairo  and  Fulton 
south  of  Pilot  Knob  in  three  years  and  to*  the  Mississippi, 
opposite  or  below  Columbus,  Kentucky,  within  five  years  from  the 
date  of  sale.  On  the  extension  of  the  Cairo  and  Fulton  no  defi- 
nite amount  of  annual  expenditure  was  stipulated,  but  the  time 
to  effect  a  junction  with  the  St.  Louis  and  Iron  Mountain  was 
limited  to  three  years.  On  the  extension  of  the  Platte  Country 
Railway  the  purchasers  would  be  required  to  expend  $250,000 
annually  until  it  was  completed,  to  finish  the  portion  of  the  road 
between  Kansas  City  and  Weston  (Platte  county),  from  Savan- 
nah (Andrew  county)  to  Forest  City  (Holt  county)  within  two 
years,  and  from  Forest  City  to  the  Iowa  state  line  in  three  years 
from  the  date  of  sale.  The  state  by  this  act  gave  to  the  pro- 
spective purchasers  the  right  to  issue  any  amount  of  bonds  neces- 
sary to  secure  the  needed  funds,  but  did  not  yield  her  first  lien 
in  behalf  of  these  bonds ;  and  the  endorsement  which  the  state 
promised  for  these  bonds  was  only  for  the  purpose  of  showing 
that  they  were  legally  issued  and  that  they  were  secured  by 
mortgage  on  the  railways.  The  payments  of  purchase  money  on 
the  several  roads  was  to  be  made  in  the  following  way  :  one- 
fourth  upon  closing  the  contract,  and  the  remaining  three-fourths 
in  five  annual  installments  with  interest  at  6  per  cent.  The 
option  of  paying  in  full  at  any  time  all  amounts  due  was  also 
given ;  and  it  was  provided  that  the  failure  to  meet  regular  pay- 
ments would  nullify  the  terms  of  the  sale  and  forfeit  the  sums 
already  paid. 

§4.  In  accordance  with  the  provisions  of  this  act  the  state 
authorities  proceeded  to  dispose  of  the  four  railways  concerned, 
the  Platte  Country,  the  South  West  Branch,  the  St.  Louis  and 
Iron  Mountain,  and  the  Cairo  and  Fulton.     The  Platte   Country 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  1 45 

was  advertised  to  be  sold  April  21,  1866;'  a  short  time  prior  to 
this  date  the  Atchison  and  St.  Joseph  and  the  Weston  and 
Atchison  companies  paid  $100,000,^  the  amount  of  the  first  install- 
ment arid  the  accrued  interest  due  January  i,  1861,  in  state 
bonds  and  coupons  into  the  treasury  of  the  state.  This  being 
done  the  sale  was  postponed  and,  excepting  the  changing  of  the 
name  of  the  company,  nothing  further  of  note  transpired  between 
the  company  and  the  state  till  the  act  of  March  17,  1868,  releas- 
ing the  state's  lien.  The  name  of  the  Atchison  and  St.  Joseph 
Railroad  Company  was  changed  to  Missouri  Valley  Railroad 
Company,  and  the  Weston  and  Atchison  was  merged  into  the 
latter  by  the  act  of  March  8,  1867." 

The  South  West  Branch  was  disposed  of  the  first  time  under 
the  act  of  February  19,  1866,  but  the  account  of  this  sale  will 
be  included  with  that  of  the  final  disposition  of  the  road.^ 

§5.  The  sales  of  the  St.  Louis  and  Iron  Mountain  and  Cairo 
and  Fulton,  under  the  act  of  February  19,  1866,  were  of  much 
greater  importance  than  that  of  any  other  road  disposed  of  under 
the  act  because  these  railways  were  more  valuable  than  any  of 
the  others.  It  was  on  this  account  that  more  interest  was  taken 
in  the  sale  of  the  St.  Louis  and  Iron  Mountain  than  in  any  of  the 
others  ;  even  the  Cairo  and  Fulton  was  regarded  as  being  worth 
but  little,  and  that  only  as  a  prospective  feeder  to  the  St.  Louis 
and  Iron  Mountain.  It  was,  however,  a  foregone  conclusion  that 
the  road  could  not  be  sold  for  anything  like  its  cost  to  the  state. 
The  commissioners  4  appointed  to  dispose  of  these  railways  sold 
the  St.  Louis  and  Iron  Mountain  at  the  court  house  in  St.  Louis, 
September  27,  1866,  and  the  Cairo  and  Fulton  at  the  court  house 
in  Charleston,  October  i,  1866.  As  no  one  bid  enough  to  cover 
the  state  indebtedness,  the  commissioners  bought  the  railways 
in   for   the   state,    and  set  to   work   to    effect   a   sale  to   private 

'  Auditor's  Report,  1883-4,  Part  2.  p.  93  ;  also  House  Journal,  1865-6,  p.  293. 
'^Auditor's  Report,  1883-4,  Part  2.  p.  93. 
3  See  below  p.  168  et  seq. 

*The  commissioners  were  Messrs.  R.  A.  Watt,  Bernard  G.  Farrar  and  Chas.  S. 
Rankin. 


146  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

parties.'  The  roads  were  advertised  for  sale  and  the  eighth  of 
November  1866  was  set  for  the  receiving  of  bids;  on  that  day 
bids  were  received  till  5:30  p.m.^  The  bids  for  the  two  rail- 
ways which  had  together  cost  the  state  ^4, 2 50,000,  exclusive 
of  interest,  varied  from  ^750,000  to  $925,000;  for  the  Iron 
Mountain  alone  there  were  two  bids,  one  of  one  million  dol- 
lars and  one  of  $  1,027, 000. ^  The  commissioners  were  not  able 
to  make  an  award  till  the  fourteenth  of  the  month  and  then  the 
award  was  not  unanimous,  one  party  dissenting  from  the  decis- 
ion. The  award  as  made  was  to  McKay,  Read,  et al.,  the  lowest 
bidders  for  the  St.  Louis  and  Iron  Mountain,  the  more  valuable 
road,  and  the  highest  bidders  for  the  Cairo  and  Fulton,  the  less 
valuable  one.  The  act  of  the  commissioners  had  to  be  approved 
by  the  governor,  but  he  was  not  able  to  come  to  a  conclusion  in 
the  matter  till  December  8,*  1866,  or  nearly  one  month  after  the 
award  had  been  made.  The  action  of  the  commissioners  and  of 
the  governor  raised  a  storm  of  indignation,  not  only  from  the 
conservative  (democratic)  press,  but  from  no  small  contingency 
of  the  radical  (republican)  press  of  the  state.  In  a  short  time 
the  clamor  resulted  in  the  appointment  by  the  state  of  a  com- 
mittee to  investigate  the  awards  made  by  the  commissioners. 
The  investigating  committee  says  that  during  the  time  in  which 
the  governor  was  considering  the  matter  of  approving  the  award, 
many  interested  parties  visited  him  and  implored  him  to  sanction 
it,  and  for  a  time  indeed  that  "a  regular  raid  was  made  on  the 
gubernatorial  mansion."  After  a  thorough  investigation  of  the 
manner  in  which    the  awards  were   made  the  committee  came  to 

^Missouri  Republican,  March  ii  and  April  3,  1867. 

-Ibid.,  April  3,  1867. 

3  The  several  bids  :  For  St.  L. 

_       ,       _        ,  ...  .    T«     T^     ^  3"d  I.  M.  For  C.  and  Total 

1.  By  the  Southeast  Missouri  R.  R.  Co.,       R.  R.  F.  Railroad 

represented   by  Mr.   Thos.  Allen  ^600,000  ;j!l5o,ooo  $750,000 

2.  By  Sumner  &  Co.        -         -         -  750,000  175,000  925,000 

3.  By  McKay,  Read  &  Co.            -  -       550,000  350,000  900,000 

4.  By  John  C.  Fremont              -          -  1,000,000                 1,000,000 

5.  By  Dinsmore  &  Co.     -               -  -     1,027,000                 1,027,000 

— See  Appendix,  House  and  Senate  Journals,  iSbS,  p.  148. 
'■St.  Louis  Democrat,  December  il,  1866. 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  I  47 

the  conclusion  that  the  commissioners  had  acted  without  investi- 
gating the  capacity  of  all  bidders  to  pay  for  the  railways,  that 
the  successful  purchasers  were  indeed  a  "ring"  bidding  high  for 
the  Cairo  and  Fulton,  the  almost  worthless  road,  that  they  might 
drop  it  and  make  a  large  profit  out  of  the  Iron  Mountain  by 
selling  it  at  an  advance  over  their  very  low  bid  for  it ;  and  also  that 
there  was  collusion  between  the  commissioners  and  the  "ring." 
The  committee  exonerated  the  governor,  however,  from  all  charges 
of  corruption/ 

'  The  committee  in  its  report  says,  in  substance,  the  Dinsmore  and  Fremont  bids, 
the  highest  on  the  list,  were  set  aside  by  the  commissioners  because  of  a  suspected 
collusion  between  the  bidders.  Upon  trial,  both  of  the  parties  bidding  testified  that 
there  was  no  understanding  between  them  ;  and  Dinsmore  testified  that  the  commis- 
sioners were  so  informed  {Missouri  Republican,  April  g,  1867).  PVemont's  bid  was 
objected  to  because  he  was  then  trying  to  build  the  South  West  Branch  of  the  Pacific, 
and  one  of  the  commissioners  thought  that  that  was  enough  for  one  man  ;  this  com- 
missioner had  also  heard  from  the  governor  that  Fremont  was  not  complying  with  the 
contract  he  then  had. 

The  bid  of  the  South  East  Missouri  Railroad  Company  was  set  aside  by  the 
commissioners  because  the  company  as  such  could  not  legally  purchase  a  rail- 
road. But  the  commissioners  did  not  inquire  into  the  ability  of  the  individual 
parties  in  this  company  to  pay  for  a  railroad.  The  evidence  taken  by  the 
committee  shows  that  Mr.  Thomas  Alien,  a  member  of  the  company,  had  state  bonds 
on  hand  alread}'  sufficient  to  make  the  first  payment.  The  bid  of  J.  A.  Sumner  was 
assumed  by  Mr.  Allen  before  the  award  was  made  but  that  did  not  strengthen  the  bid, 
because  the  commissioners  regarded  the  corporation  as  existing  only  upon  paper. 
Concerning  the  bid  of  A.  J.  McKay  et  al.,  the  committee  says  that  so  far  as  the  com- 
missioners could  see  it  was  evidently  one  of  the  lowest  and  worst  ones  of  the  lot ;  for 
there  was  no  evidence  that  McKay  was  a  man  of  any  considerable  means,  but  rather  a 
stranger  almost  without  property  in  this  state,  when  he  put  in  a  bid  signed  by  himself 
and  "others"  who  might  be  anybody  at  all,  and  yet  the  award  was  made  to  him  .  .  . 
we  find  the  commissioners  inquired  as  to  who  the  associates  of  McKay  were,  and  we 
cannot  understand  why  they  did  not  make  similar  inquiries  of  Fremont  and  Dinsmore. 

It  will  be  recalled  that  there  were  three  bids  for  the  Cairo  and  Fulton,  McKay  and 
Company  bidding  the  highest  for  this  road.  The  investigating  committee  says,  from 
the  facts  mentioned  concerning  the  bids  for  this  road,  your  committee  "cannot  escape 
the  conclusion  that  the  ring  put  in  this  bid  for  so  much  more  than  the  road  was  worth 
for  the  purpose  of  swelling  the  aggregate  amount  bid  for  both  roads  to  about  the  sum 
bid  by  others,  that  the  commissioners  might  be  justified  in  making  this  award  to  them; 
and  that  they  intended  to  drop  the  Cairo  and  Fulton  Railroad  so  as  to  have  a  wide 
margin  for  the  contemplated  speculation  in  the  Iron  Mountain  without  that  of  the 
Cairo  and  Fulton."  Concerning  the  matter  of  collusion  between  the  commissioners 
and  the  so-called  "ring"  the  committee  says  it  appears  by  the  testimony  of  McKay 
that  John  O'Farrar,  brother  of  one  of  the  commissioners,  was  interested  in  the  enter- 


148  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

Whether  or  not  there  were  other  bids  higher  and  just  as 
responsible  as  those  which  were  accepted  by  the  commissioners, 
is,  of  course,  well-nigh  impossible  at  this  late  day  to  determine. 
It  appears,  however,  from  the  testimony'  taken  by  the  investi- 
gating committee  that  Charles  P.  Chouteau,  a  member  of  a 
wealthy  mercantile  firm  in  St.  Louis,  made  a  private  offer  to  the 
governor  some  four  or  five  days  before  the  approval  of  the 
awards  of  the  commissioners  of  ^i, 280, 500  for  both  roads. ^  The 
ability  of  Chouteau  to  pay  for  the  railways  no  one  questioned  ; 
later  he  was  one  of  the  purchasers  of  the  South  West  Branch. 
Again  Mr.  Thomas  Allen,  president   of  the  South  East  Missouri 

prise  at  the  time  the  bids  were  made;  also  that  Commissioner Farrar  promised  McKay 
to  vote  for  the  award  to  him  (McKay). 

Concerning  the  approval  of  the  award  by  the  governor  the  committee  says  in  sub- 
stance that  this  seems  to  have  been  a  matter  of  great  solicitude  on  the  part  of  the  pur- 
chasers and  deliberation  on  the  part  of  the  governor,  that  the  governor  was  importuned 
by  Bernard  G.  Farrar,  one  of  the  commissioners,  to  approve  of  the  award,  and  that 
he  (Farrar)  carried  a  letter  representing  that  all  the  commissioners  had  signed  the 
award.  As  this  did  not  succeed,  one  or  two  agents  were  procured  and  a  regular  raid 
was  made  upon  the  gubernatorial  mansion  by  those  who  were  interested  in  the  parties 
to  whom  the  commissioners  had  awarded  the  roads.  Commissioner  Farrar  represented 
that  Judge  Rankin,  one  of  the  commissioners,  had  agreed  to  the  award,  but  had  not 
signed  it.  The  committee  says  Judge  Rankin,  it  seems,  was  the  person  in  whom 
the  governor  most  confided,  and  that  this  perhaps  more  than  anything  else  prevented  a 
prompt  rejection  of  the  award  by  the  governor.  The  committee  states  further  that  the 
governor  in  the  kindness  of  his  heart  allowed  everybody  to  talk  to  him,  and,  by  his 
own  statements,  suffered  himself  to  be  troubled  in  mind  about  it,  and  finally  to  be 
reasoned  and  persuaded  from  his  first  conclusion  as  to  what  was  best  to  be  done.  On 
this  account  the  committee  says  that  however  much  his  judgment  may  have  been  at 
fault  in  the  matter,  there  is  no  evidence  or  reason  to  suspect  corrupt  action  on  his  part. 
There  seems,  says  the  committee,  to  have  been  a  so-called  "  slush  fund"  of  ^50,000,  or 
;?6o,ooo,  but  they  add  that  they  failed  to  find  that  any  part  of  it  was  used  for  purposes 
of  corruption. 

What  has  just  been  given  is  the  substance  of  the  majority  report  made  by  Major  J.  ■ 
C.  McGinnis  and  James  S.  Rollins  of  the  investigating  committee,  the  former  a  radical 
and  the  latter  a  conservative.  Following  the  majority  report  there  is  a  minority  report 
by  a  Dr.  Smythe,  the  remaining  member  of  the  committee,  a  conservative.  Of  the 
minority  report,  it  will  suffice  to  say  that  it  goes  much  further  in  condemning  the  action 
of  the  commissioners  in  making  the  award  to  McKay  and  Company. — See  report  of 
committees.  House  Jo'urnal,  March  12,  1867. 

'^ Missouri  Republican,  April  21,  1867. 

=  For  the   St.   L.  and   I.   M.         -         -         -         ;?i, 020,500 

"      "     C.  and  F.        -         -         -         -         -  260,000 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  1 49 

Railway  Company,  wrote  an  earnest  letter  to  the  governor  Decem- 
ber 7,  1866/  in  which  he  stated  that  two  bids  one  of  which  at 
least  was  higher  than  any  received  by  the  commissioners  were 
sent  to  the  commissioners  on  November  8,  but  did  not  arrive 
within  the  time  set  for  receiving  bids  ;  the  delay,  however,  he 
said  was  owing  to  the  understanding  of  the  bidders  that  bids 
would  be  received  till  midnight  of  the  eighth.  Mr.  Allen  further 
states  that  if  he  were  given  an  opportunity  he  would  give  ;^8oo,- 
000  for  the  Iron  Mountain  alone.  Mention  of  another  bid 
(1.9  million  dollars),  twice  as    large  as  the  one  accepted,  is  also 

'  This  letter  says  in  part  that  the  award  was  agreed  to  on  November  14,  1866,  by 
Watt  and  Farrar,  Rankin  dissenting,  and  continues,  "The  award  has  been  lying 
before  you  (governor)  unapproved  up  to  this  time.  The  commissioners  did  not  choose 
to  inquire  into  the  responsibility  of  the  South  East  Missouri  Railroad  Company,  but  the 
merits  and  ability  of  McKay  and  Company  seemed  to  have  been  readily  conceded.  The 
South  East  Missouri  Railroad  Company  have  ample  means  to  complete  the  road.  Who 
are  McKay  and  Company  ?  They  may  be  very  wealthv  and  competent  gentlemen 
who  have  served  their  country  as  quartermasters  or  commissaries  for  aught  I  know. 
But  I  am  unable  to  answer  who  they  are  except  from  a  species  of  evidence  which  is  not 
held  to  be  competent. 

"Now,  sir,  if  the  South  East  Missouri  Railroad  Company  are  as  competent  a  party 
from  aggregate  capital  and  railroad  experience  as  McKay  and  Company,  why  should 
$200,000  of  the  state's  money  be  thrown  away  to  favor  the  latter  ?  Why  should  you 
give  this  road  away  for  $550,000  (ten  cents  on  the  dollar  of  its  cost)  when  a  num- 
ber of  parties  offer  hundreds  of  thousands  more  ?  Why  should  you  forego  the  oppor- 
tunity of  saving  to  the  state  a  half  million  of  dollars  ?  Why  disregard  the  remon- 
strances of  our  leading  merchants  and  capitalists  and  citizens  of  all  parties  ?  The 
commission  has  of  course  made  the  award  and  is  defunct.  The  road  cannot  be  again 
advertised,  and  for  that  reason  we  cannot  bid  again,  because  it  is  evident  that  it  is  not 
the  highest  and  best  bid  that  gets  the  award.  But  let  the  legislature  confirm  the  road 
to  the  highest  and  best  bidders  or  pass  a  new  law  regulating  the  sale  of  the  road,  so  as 
to  prevent  fraud  and  connivance.  If  offered  at  public  auction  to  the  highest  bidder  at 
the  court  house  doorat  St.  Louis,  I  am  perfectly  confident  the  state  would  be 
gainer  to  the  extent  of  half  a  million  dollars  at  least.  For  I  hereby  pledge  myself  that 
if  the  Iron  Mountain  Railroad  will  be  offered  in  open  market  I  will  start  the  bidding 
with  the  offer  of  $800,000,  and  if  no  one  bids  higher  will  pay  the  purchase  money 
before  receiving  the  deed.  After  McKay  and  Company  pay  the  first  installment,  the 
other  can  be  paid  out  of  net  earnings  of  the  road,  because  the  net  earnings  for  Octo- 
ber last  were  given  as  over  $20,000.  ...  If  you  can  sanction  such  a  sale  as  that  [the 
award  to  McKay]  you  will  certainly  make  it  questionable  whether  you  are  not  a  better 
soldier  than  salesman.  Very  respectfully, 

Thomas  Allen." 

"St.  Louis,  December  7,  1866." 

— Missouri  Republican,  December  9,  1866. 


150  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

made  in  which  J.  W.  Parish  and  Co.  of  the  Baltimore  and  Poto- 
mac Railroad  Company  and  a  number  of  iron  manufacturers  of 
Pennsylvania  were  interested.'  With  these  last  mentioned  bids 
were  associated  the  names  of  parties  who  had  a  much  greater 
reputation  for  wealth  and  business  capacity  than  those  to  whom 
the  railways  were  awarded.  In  such  times  as  these  it  is  indeed 
quite  common  for  political  animosity  to  show  itself  to  the  detri- 
ment of  the  economic  interests  of  the  community  ;  and  in  connec- 
tion with  these  sales  political  animosity  appears  when  the  governor 
says  in  a  communication  to  the  commissioners  regarding  the  sale 
that  one  consideration  with  him  would  be  the  giving  of  the  road 
to  "men  who  belong  to  the  progressive  party  of  the  state,"  and 
who  were  "  thereby  in  sympathy  with  "  and  had  the  "  capital  of  the 
country."^  Indeed  the  parties  to  whom  the  railways  were 
awarded,  it  seems,  had  very  little  capital  and  certainly  did  not 
finish  the  railways ;  in  a  few  weeks  they  sold  out  to  one  of  their 
competitors  of  November  8  for  an  advance  of  ^275,000  in  cash 
and  ^100,000  in  the  stock  of  the  company. ^ 

Because  of  this  transfer  of  the  railways  to  Mr.  Allen  for 
so  great  an  advance  in  so  short  a  time,  many  people  thought 
that  the  railways  had  not  brought,  under  the  award  of  November 
8,  their  full  value.  The  feeling  against  the  commissioners, 
because  of  this  sale,  grew  so  rapidly  that  early  in  the  spring  of 
1867  the  attorney-general  of  the  state  filed  a  petition  for  an 
injunction  against  Mr.  Thomas  Allen  to  recover  for  the  state  a 
portion  of  what  had  been  lost. 4  The  attorney-general  asked 
for  the  injunction  to  restrain  the  company  from  enjoying  the 
usufruct   of     the    railway   because    it   had   been    (November   8) 

'  J.  W.  Parish  and  Company  of  the  Baltimore  and  Potomac  Railroad  Company,  in 
conjunction  with  several  iron  manufacturers  of  Pennsylvania  who  represented  an 
aggregate  capital  of  from  five  to  ten  millions,  made  a  bid  largely  exceeding  any  other 
yet  reported,  having  offered  1. 9  million  dollars.  They  had  been  assured  by  the 
attorney  for  the  commissioners  that  all  bids  received  before  midnight  on  the  day  of 
the  sale  (8th  instant)  would  be  considered. — See  an  editorial  in  the  Washington 
Chronicle  (Forney's  paper)  in  Missouri  Republican,  December  i,  1866. 

'^  House  and  Senate  Journals,  Adjouj-ned  Session,  1868,  Appendix,  p.  160. 

^Ibid.,^.  157. 

^Missouri  Republican,  April  18,  1867. 


CONCLUSION  OF  THE  EXPERIMENT  OF  STATE  AID       I5I 

awarded  to  the  "  lowest  and  worst  bidders  ;  "  that  the  purchasers 
could  not  complete  the  railways,  and  that  Mr.  Allen  had  joined 
with  the  purchasers  in  urging  the  governor  to  approve  the  sale 
with  the  understanding  that  he  should  have  a  controlling  interest 
and  have  the  railways  transferred  to  him  for  a  bonus  of  S375,- 
000.  Although  it  is  also  stated  in  the  petition  that  a  fund  of 
$65,000  or  $70,000  was  raised  in  order  to  "mollify"  public 
opinion,  public  opinion  was  really  divided  as  to  the  expediency 
of  urging  this  suit.  Many,  indeed,  thought  a  great  wrong  had 
been  committed  against  the  state,  and  wanted  it  ferreted  out;' 
others,  admitting  that  a  wrong  had  been  committed,  urged  that 
the  suit  be  withdrawn,  because  the  prosecution  of  it  would 
hinder  the  extension  of  the  railway,  and  thereby  cause  a  greater 
loss  by  retarding  the  development  of  the  state  than  could  be 
gained  by  the  suit.'' 

Immediately  upon  the  opening  of  the  adjourned  session  of 
the  legislature,  January  1868,  Mr.  Allen  appeared  before  the 
legislature  with  a  petition  asking  that  the  suit  be  withdrawn  and 
his  title  be  confirmed. 3  The  matter  was  referred  to  committees 
by  both  the  house  and  senate.  However,  before  these  commit- 
tees, acting  jointly,  could  complete  their  task  the  governor  seized 
the  St.  Louis  and  Iron  Mountain  Railroad.^  The  special  mes- 
sage of  the  governor  concerning  the  seizure  of  the  road  was 
referred  by  the  senate  to  the  select  committee  already  appointed 
and  by  the  house  to  a  new  committee.  The  results  of  these 
various  investigations   were   laid   before   the   senate  January  25, 

"' We  trust  that  the  attorney-general  will  push  the  investigation  to  a  successful 
termination,  that  the  people  may  fully  understand  who  it  is  that  have  so  wantonly 
betrayed  them.  In  filing  this  bill  the  attorney  will  be  sustained  by  the  Radi- 
cal party  of  the  state,  the  majority  of  whom  are  unanimous  in  their  opinion  that  a 
great  outrage  has  been  perpetrated,  and  they  are  unwilling  to  shoulder  the  iniquity 
for  the  purpose  of  screening  any  man  or  set  of  men." — See  editorial  from  Booneville 
Eagle  (Radical  paper)  in  Missouri  Republican,  May  8,  1867. 

''See  resolution  adopted  by  a  "Railroad"  meeting  at  fronton,  Iron  county,  signed 
by  D.  A.  Wilson,  Missouri  RepzMican,  April  19,  1S67. 

^Senate  Journal,  Adjourned  Session,  1868,  p.  5. 

^See  governor's  special  message,  January  17,  1868,  Senate  Journal,  Adjourned  Ses- 
sion, J  868,  p.  74  ■>  also  House  and  Senate  Journals,  Adjourned  Session,  /S68,  p.  166. 


152  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

and  before  the  house  February  27  (1868).'  The  report  before 
the  senate  was  made  in  two  parts,  (i)  the  results  of  the  joint 
investigation  with  the  house  committee  and  (2)  the  results  of 
further  work  of  a  special  senate  committee.  The  first  portion 
of  the  report  was  that  made  by  the  committee  known  as  the 
Evans  committee.  This  report  held  that  the  investigating  com- 
mittee of  an  early  date,  known  as  the  McGinnis  committee, 
whose  work  has  already  been  considered,  in  taking  testimony 
regarding  the  award  of  November  8,  1866,  had  proceeded  in  what 
the  committee  called  an  ex  parte-  way,  and  that  on  this  account 
the  whole  ground  must  be  gone  over  again.  The  results  of  the 
first  investigating  committee  were  almost  if  not  wholly  reversed 
by  the  Evans  committee,  this  portion  of  the  committee  going 
so  far  as  to  dig  up  the  tax  receipts  of  some  of  the  unsuccessful 
competitors  for  the  railways  on  the  memorable  November  8  to 
prove  that  they  were  not  able  to  pay  for  a  railway. 3  The  second 
portion  of  the  report  found  that  the  required  sum  of  $500,000 
had  been  spent  on  the  St.  Louis  and  Iron  Mountain  Railroad 
between  March  12,  1867,  and  the  present  date,  and  on  this 
account  and  for  reasons  of  expediency  recommended  the  with- 
drawal of  the  suit  and  the  confirmation  of  Mr.  Allen's  title.''  The 
majority  report  in  the  house  was  in  accord  with  the  first  portion 
of  the  senate  report  as  given  above,  but  the  minority  report  was 
much  less  severe  on  the  former  investigating  committee. ^ 

In   the   complaint    filed   by  the   attorney-general   and  in  the 

'  Settate  Journal,  Adjourned  Session,  1868,  p.  74,  and  House  Journal,  Adjourned 
Session,  1868,  pp.  92  and  131. 

^  House  and  Senate  Journals,  Adjourned  Session,  /868,  Appendix,  pp.  156  and  162. 

3/6id.,p.  183.  ''Ibid.,  pp.  185-194. 

5  This  was,  however,  not  the  end  of  investigation  concerning  this  matter.  The 
minority  of  the  committee  just  referred  to  held  that  the  investigation  had  not  been 
completed,  and  that  their  report  must  "  justly  be  considered  premature  "  {House  Jour- 
nal, Adjourned  Session,  i8b8,  pp.  1 15-176).  Because  of  the  odium  which  the  major- 
ity report  cast  upon  the  work  of  the  McGinnis  committee,  especially  in  regard  to 
"doctoring"  the  testimony,  Mr.  McGinnis  on  the  following  day,  January  28,  intro- 
duced a  resolution  for  the  appointment  of  a  committee  of  three  to  examine  the 
manuscript  and  printed  reports  of  the  testimony  taken  by  the  committee  of  which  he 
had  been  chairman.     The  committee  was  appointed,  spent   two  weeks  in  taking  testi- 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  I  53 

reports  of  investigating  and  reinv^estigating  committees  the  value 
and  condition  of  the  St.  Louis  and  Iron  Mountain  and  Cairo  and 
Fulton  railways  are  in  a  measure  brought  out.  The  attorney- 
general  states  that  the  Iron  Mountain  road  was  considered  to  be 
worth  two  million  dollars,  and  that  the  gross  earnings  were  con- 
sidered to  be  worth  about  $40,000  monthly  ;  neither  statement 
is,  however,  authenticated.  Mr.  Allen,  in  giving  evidence  before 
the  Evans  committee,  says,  "The  track  and  rolling  stock  when  I 
took  possession  of  the  road  were  very  much  worn  and  run  down. 
In  many  cases  the  track  had  become  dangerous,  and  the  ties 
were  rotten  and  useless  in  large  numbers  —  and  that  the  amount 
expended  on  such  repairs  in  the  preceding  eleven  months 
amounted  to  $236,289."  Again  he  declares  that  the  actual 
value  of  the  Cairo  and  Fulton  Railroad  did  not  at  the  time  of 
the  sale  exceed  $150,000  to  $175,000.  The  track  was  over- 
grown with  trees  and  shrubs,  the  trestle-work  and  ties  decaying, 
the  embankments  injured  by  floods,  the  iron  rusted,  and,  in  fact, 
the  principal,  if  not  the  only  value,  consisted  in  about  2000  tons 
of  rails  not  worth  ov^er  $70  to  $75  per  ton.  The  value  of  9000 
or  10,000  acres  of  refuse  land  remaining,  belonging  to  the  road, 
did  not  exceed  $5000  to  $7000."' 

mony  in  St.  Louis  and  New  York  city,  and  reported  to  the  house  February  13,  1868. 
This  committee  was  also  divided.  The  majority  report  says  that  with  slight  but 
immaterial  differences,  there  was  "  no  discrepancy  between  the  written  and  printed 
evidence  "  as  reported  by  the  McGinnis  committee.  The  minority  report  says  that, 
with  certain  slight  exceptions,  "The  investigation  of  the  McGinnis  committee"  was 
"fair  and  impartial,  and  the  testimony  published  as  taken  {House  Journal,  /S68, 
Adjourned  Session,  pp.  3I5""3I7)- 

The  special  house  committee  of  nine  appointed  to  consider  the  special  message 
of  the  governor  of  January  17,  1868,  reported  February  21  (House  Journal,  Adjourned 
Session,  1868,  pp.  374-381).  Both  majority  and  minority  agree  that  the  amount 
(^500,000)  stipulated  by  the  act  of  February  19,  1866,  as  the  amount  to  be  expended 
annually  by  the  purchaser  of  this  road,  had  not  been  expended,  and  consequently  the 
governor  was  justified  in  seizing  the  road.  However,  both  also  agree  that  as  great 
an  amount  and  even  more  than  $500,000  had  been  expended,  although  not  exactly  in 
conformity  with  the  requirements  of  the  act  of  February  19,  1866,  and  that  for  this 
reason  the  state  should  restore  the  road  to  Mr.  Allen  free  of  all  incumbrances.  The 
differences  between  the  reports  of  the  majority  and  minority  portions  of  the  committee 
were  immaterial. 

^  House  and  Senate  Journals,  Adjourned  Session,  186S,  Appendix,  pp.  164-165- 


154  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

In  weighing  the  testimony  of  Mr.  Allen  it  must  be  remem- 
bered that  he  was  now  in  possession  of  the  railways,  and  there- 
fore had  an  economic  motive  in  speaking  only  of  expenses  and 
not  of  net  earnings.  Still  the  condition  of  the  Cairo  and  Fulton 
could  hardly  have  been  other  than  stated  by  Mr.  Allen,  as  it  was 
a  very  short  road  and  made  no  valuable  connections  whatever. 
The  St.  Louis  and  Iron  Mountain,  however,  had  during  the  war 
earned  more  than  enough  to  pay  operating  expenses  and  to  keep 
the  road  in  moderate  repair.  The  net  earnings  of  this  railway, 
we  have  seen,  had  gradually  increased  from  1859  to  1862  and  in 
1863  there  was  a  great  jump  from  ^65,258  to  ;^i6i,223,  the  latter 
sum  representing  about  2.8  per  cent,  interest  on  the  whole 
investment  of  $5,760,000.'  For  the  year  ending  October  1865 
the  net  earnings  were  still  greater,  amounting  to  3.2  per  cent,  on 
the  entire  investment.'  In  1863  the  company  was  able  to  pay 
and  did  pay  $60,000  on  its  delinquent  interest  account.^  Again, 
it  must  be  recalled  that  Mr.  Allen  himself  stated,  in  the  letter  of 
December  7,  1866,  to  Governor  Fletcher,  that  the  net  earnings 
for  the  month  of  October  preceding  were  said  to  be  $20,000,  and 
further  that  after  the  purchasers  had  paid  the  first  installment  of 
the  purchase  price,  they  would  be  enabled  to  complete  the  pay- 
ment for  the  road  out  of  the  net  earnings.^  If  net  earnings  were 
approaching  $20,000  a  month  or  $240,000  a  year,  the  value  of 
the  road  capitalized  at  6  per  cent.,  an  average  rate  for  those 
times,  would  be  four  million  dollars.  Taking  the  amount  of  net 
earnings  for  1865,  $199,600,  as  given  by  the  president  of  the 
company  for  the  basis  of  computation,^  the  value  of  the  road 
capitalized  at  6  per  cent,  would  be  $3,326,666.  And  although 
for  a  part  of  the  time  during  the  war  as  much  as  nearly  one- 
fourth  of  the  receipts  for  transportation  arose  from  government 
business  which  would  fall  off  after  the  close  of  the  struggle,  it 
must  be  taken  into  account  that  trade    in    general    revived   after 

'  See  Table  V.  Appendix  i. 

^  House  Journal,  1863,  Appendix,  p.  6;  also  Auditor's  Report,  1883-4,  Part  2, 
P-  99- 

3  See  above,  note  (')  p.  149. 

^See  Table  V.  Appendix  i.;  also  Senate  Journal,  j86y.  Appendix,  p.  880. 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  I  55 

the  close  of  the  war.  And  the  statement  of  Mr.  Allen  in  1866, 
referred  to  above,  concerning  the  net  earnings  of  the  road  seems 
to  indicate  that  the  increase  due  to  the  general  revival  of  trade 
more  than  balanced  all  decrease  that  took  place  from  the  falling 
off  of  government  business.  This  being  the  case,  it  must  be 
held  that  the  real  value  of  the  St.  Louis  and  Iron  Mountain 
Railway  awarded  on  November  8,  1866,  to  McKay,  Reed,  et  al., 
for  $900,000,  estimating  the  Cairo  and  Fulton  as  worth  nothing, 
was  somewhere  in  the  neighborhood  of  three  million  dollars. 

The  presumption  that  the  two  railways  did  not  bring  what 
they  were  worth  by  the  award  of  the  commissioners  as  already 
considered  is  strengthened  by  the  statement  of  Governor 
Fletcher  that,  in  his  opinion,  these  roads  should  have  brought 
a  larger  amount.  The  governor  held,  however,  that  the  para- 
mount want  of  the  Southeast,  of  St.  Louis  and  of  the  state,  w;as 
the  completed  railroad,  and  not  the  contingency  of  a  few  thousand 
dollars  more  for  it  in  the  sale,  which,  if  obtained,  would  be  no 
adequate  compensation  for  delay,  or  even  the  risk  of  delay,  in 
this  long  deferred  enterprise. 

The  speedy  completion  of  the  railroads  was  indeed  a  matter 
to  be  obtained  even  at  the  cost  of  several  thousand  dollars.  And 
on  the  ground  that  Mr.  Allen  was  proceeding  in  accordance  with 
the  conditions  of  the  law  of  February  19,  1866,  in  extending  the 
Iron  Mountain  Railway,  and  that  further  litigation  would  retard 
the  development  of  the  southeastern  part  of  the  state  and  defer 
railway  connection  with  the  South,  the  legislature  passed  an  act, 
March  17,  1868,  which  confirmed  the  title  held  by  Mr.  Allen  or 
by  the  New  St.  Louis  and  Iron  Mountain  Railroad  Company 
incorporated  July  29,  1867,  and  represented  by  him.  The  same 
act  appropriated  certain  funds  for  the  building  of  a  railway  from 
Pilot  Knob  to  the  state  line  of  Arkansas.  The  act  required  the 
purchaser  to  complete  the  St.  Louis  and  Iron  Mountain  to  the 
junction  of  the  Cairo  and  Fulton  in  two  years  and  to  Belmont 
(Mississippi  county)  in  three  years.  The  state  reserved  the 
right  to  institute  a  suit  at  any  time  to  recover  any  money  of 
which  the  state  may  have  been  defrauded  in  the  sale   of  the   St. 


156  STATE    AID    TO    RAII,WAYS    IN    MISSOURI 

Louis  and  Iron  Mountain  and  Cairo  and  Fulton  railways,  pro- 
vided that  this  proceeding  affected  in  no  wise  the  title  of  Mr. 
Allen.  The  new  company  was  to  assume  the  payment  of  the 
amount  yet  due  on  the  Cairo  and  Fulton.  However  the  funds 
appropriated  in  the  act  of  March  17,  1868,  for  building  a  railway 
from  Pilot  Knob  to  the  state  line  of  Arkansas  were  defined  in 
the  later  act  of  March  23,  1868,  as  the  amount  ($664,300)  yet 
remaining  due  on  both  of  the  railways.  This  amount  was  released 
to  the  company  at  the  rate  of  $15,000  per  mile  for  every  new 
mile  of  railway  built.  Including  all  of  the  partial  payments  made 
by  the  owners  and  different  purchasers  of  the  St.  Louis  and  Iron 
Mountain  and  Cairo  and  Fulton  railways  the  state  received  in 
all  $391,616  for  railway  property  which  had  cost  the  state  in 
bonds  and  interest  $6,478,070,  and  which  all  the  evidence 
accessible  seems  to  indicate  was  worth,  if  net  earnings  be  taken 
as  a  basis,  about  three  million  dollars.  However,  as  no  one 
offered  this  amount,  it  may  with  great  propriety  be  said  that  the 
roads  were  not  worth  so  much.  In  the  case  as  it  actually  pre- 
sented itself  to  the  state  at  this  time  there  were  two  courses  for 
the  state  to  pursue,  (i)  to  sell  the  railways  for  what  they  would 
bring,  or  (2)  to  operate  them  as  state  railways.  These  alterna- 
tives will  be  hastily  considered  later.^ 

§  6.  That  the  disposal  of  the  St.  Louis  and  Iron  Mountain 
and  Cairo  and  Fulton  railways  at  such  a  nominal  sum  should 
have  resulted  in  legislative  investigation  and  reinvestigation  such 
as  we  have  seen  took  place  was  quite  natural.  And  one  is  not 
a  little  surprised  to  find  that  the  various  individual  parties  con- 
cerned indulged  afterwards  in  making  charges  and  counter- 
charges of  corruption  against  each  other,  that  they  published 
"Cards"  of  vindication  which  were  responded  to  in  a  vigorous 
manner,  and  indulged  so  freely  in  vituperation  that  each  seems 
to  have  regarded  the  other  as  the  very  incarnation  of  scoundrel- 
ism.  The  bringing  to  light  of  this  and  like  evidence  of  cor- 
ruption yet  to  follow  gives  us  a  conception  of  the  public  morality 

'See  below,  chapter  vii. 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  I  57 

of  the  state  at  this  time.'  It  may  be  of  service  to  us  in  rendering 
a  final  decision  as  to  the  possibility  of  the  control  of  the  railways 
by  the  state  as  an  alternative  to  disposing  of  them  to  private 
parties.^ 

§  7.  The  act  confirming  Mr.  Allen's  title  to  the  St.  Louis  and 
Iron  Mountain  Railway,  and  the  appropriation  of  the  unpaid 
balance  on  the  former  sale  of  the  two  railways  to  assist  the  com- 
pany in  building  the  St.  Louis  and  Iron  Mountain  from  Pilot 
Knob  to  the  Arkansas  state  line,  is  the  first  of  the  many  acts  of 
this  nature  which  were  enacted.  Two  other  railways  were  dis- 
posed of  in  practically  the  same  manner  on  the  same  day,  one 
on  the  following  day,  and  the  remaining  road  in  default  on  the 
last  day  of  the  month.  The  next  railway  to  be  aided  in  the 
manner  in  which  the  St.  Louis  and  Iron  Mountain  was  aided  was 
the  Missouri  Valley,  as  the  former  Platte  Country  Railroad  was 
now  called.  There  were,  indeed,  special  reasons  for  adopting  a 
liberal  policy  towards  this  railway,  if  such  a  policy  would  lead  to 
its  completion.  We  have  seen  that  during  the  war  practically  no 
progress  was  made  in  the  extension  of  this  line  and  that  the  pur- 
chasers of  it  in  1866,  as  they  were  not  able  to  comply  with,  or  at 

'  See  in  addition  to  references  already  given  a  speech  by  Hon.  James  J.  MacBride, 
in  the  House  of  Representatives,  January  28,  1868,  following  the  report  of  the  Evans 
committee  on  the  27th — Missouri  Republican,  January  29,  1868;  also  speech  of  Hon. 
Eugene  Williams  —  Missouri  Republican,  February  20,  1868.  See  also  statement 
that  one  of  the  commissioners,  R.  A.  Watt,  solicited  the  appointment  as  commissioner 
— Missouri  Republican,  March  21,  1867.  See  "Democrat  and  Slush  Fund"  in  Missouri 
Repttblicati,  April  16,  1867,  and  "Once  More  " — Ibid.,  April  17,  1867,  and  correspond- 
ence from  Jefferson  City,  Ibid.,  March  13,  1867. 

See  Farrar's  "Vindication  " — Missouri  Republican,  March.  15,  1867,  also  Watt's 
"Card,"  Ibid.,  March  16,  1867,  denying  that  he  ever  told  Farrar  that  he  (Watts)  was 
offered  bribes;  also  "Card"  by  D.  W.  Dreyer, denying  that  he  offered  anyone  ^10,000 
as  a  bribe,  as  stated  by  Farrar  as  having  come  from  Watt,  Ibid.;  see  Farrar's  "Vindi- 
cation," answered  by  "  Radical,"  Ibid.  Farrar  attacks  McGinnis's  (Chairman  of 
Investigating  Committee)  private  record,  De7nocrat,  March  15,  1867;  McGinnis 
replies.  Democrat,  March  21,  1867.  Farrar  charges  collusion  between  Dinsmore  and 
Fremont,  two  of  the  bidders ;  Dinsmore  denies  any  such  collusion,  Missouri  Repub- 
lican, March  25,  1867  ;  Fremont  also  denies  it  in  testimony  before  investigating  com- 
mittee—  House  and  Senate  Journals,  Adjourned  Session,  1868,  Appendix,  p.  181. 

'  See  below,  p.  226  et  seq. 


158  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

least  did  not  comply  with,  the  terms  of  their  contract  with  the 
state,  had  become  involved  in  litigation  and  on  this  account  had 
not  been  able  to  push  the  road  to  completion.  The  purchasers 
early  in  1867  asserted,  however,  if  newspaper  correspondence  can 
be  trusted,  that  they  could  and  would  pay  the  amount  owed  to 
the  state,  but  that  they  preferred  to  pay  it  in  the  form  of  a 
completed  railway,  and  offered  to  the  state  the  choice  of  the 
alternatives  of  compelling  them  to  pay  the  debt  or  of  releasing 
the  lien  and  thus  enabling  them  to  complete  it.' 

The  completion  of  the  road  would  afford  railway  connection 
between  Kansas  City  and  the  Northwest.  Moreover,  this  part 
of  the  state  now  stood  in  special  need  of  a  railway.  The  Mis- 
souri River,  so  long  regarded  and  even  at  this  time  spoken  of  as 
the  "inherited"  channel,  was  proving  totally  inadequate  to  the 
demands  of  trade.  Shippers  in  the  Northwest  during  the  winter 
months  preferred  to  have  freight  sent  by  way  of  Chicago  on  rail- 
ways in  Illinois  and  Iowa,  than  to  wait  till  the  "inherited"  chan- 
nel thawed  out.'  And,  further,  the  extension  of  the  Missouri 
Valley  Railway  would  help  to  accomplish  the  end  sought  for  in 
the  beginning  of  the  railway  experiment,  which  was  the  drawing 
of  the  trade  of  the  Northwest  to  the  city  of  St.  Louis.  As 
railways  leading  to  Chicago  had  already  penetrated  this  region 
it  was  high  time  for  the  people  of  Missouri  and  especially  of  St. 
Louis  to  see  to  the  completion  of  the  Missouri  Valley  Railway.^ 

'  "  The  company  do  not  refuse  to  pay  the  lien  ;  on  the  contrary  they  declare  their 
determination  to  pay  it.  They  say,  however,  that  unless  they  can  work  it  out  no  new 
road  can  be  built.  They  can  pay  their  debt  to  the  state  with  the  earnings  of  the  road, 
and  will  do  as  the  state  directs.  The  only  question  then  is,  will  the  state  have  the  road 
completed  immediately  or  will  she  collect  her  lien  on  the  unfinished  road." — Corre- 
spondence from  Jefferson  City,  Defnocrat,  February  14,  1867. 

^See  article  by  "Legion"  in  ZJfwfcr^z/',  January  17,  1867.  The  writer  relates  that 
a  St.  Louis  merchant  when  ready  to  return  a  quantity  of  sacks  to  Omaha,  where  he 
had  bought  grain,  found  that  the  "  inherited  "  channel  was  blocked  with  ice.  The  St. 
Louis  merchant,  being  ordered  by  the  owner  of  the  sacks  to  ship  them  back  by  way  of 
Chicago  on  railroads  through  Illinois  and  Iowa,  proved  "  too  plucky  "  to  be  found 
shipping  by  way  of  Chicago,  and  preferred  to  suffer  the  extra  cost  of  sending  the  sacks 
back  by  the  Merchants'  Union  Express  in  stages  on  dirt  roads  along  the  valley  of  the 
Missouri  River. 

3  See  editorial   in  St.  Joseph    Union,  quoted   in   Missouri  Keptiblican,  January   23, 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  I  59 

And  again  the  state  funds  and  accrued  interest,  $994,000, 
owing  by  this  company,  were  very  small  compared  with  the 
amount  ($6,478,070)  formerly  owed  to  the  state  by  the  St, 
Louis  and  Iron  Mountain  and  Cairo  and  Fulton  railways. 
Although  the  two  latter  railways,  with  the  extensions  required 
bv  the  recent  acts  releasing  the  state's  lien,  would  give  the  state 
a  little  less  than  300  miles  of  railway,  the  Missouri  Valley,  when 
completed,  would  give  the  state  about  half  as  many  miles, 
extending  through  a  more  fertile  part  of  the  state  and  ultimately 
making  quite  as  valuable  external  connections. 

Of  the  two  propositions  which  the  Missouri  Valley  Railroad 
Company  made  to  the  state,  namely  (i)  of  paying  the  amount 
due  on  the  road,  or  (2)  extending  the  road  to  the  Iowa  line  on 
condition  that  the  lien  be  released,  the  state  chose  the  latter. 
The  lien  was  released  on  condition  that  the  company  pay  into 
the  treasury  of  the  state  $334,000  in  state  bonds,  $334,000  in  the 
bonds  of  the  company,  and  $100,000  in  certificates  of  stock  of 
the  company.'  Then  for  every  mile  of  railway  completed  the 
state  was  to  return  $5000  of  the  state  bonds  received,  $7000  of 
the  company's  bonds,  and  upon  the  completion  of  the  road  to 
the  Iowa  line  cancel  the  $100,000  of  stock  deposited  by  the 
company.  The  railway  was  to  be  extended  up  the  valley  of  the 
One-Hundred-and-Two  River  to  the  Iowa  line  by  December  i, 
1869,  or  the  privileges  of  the  company  would  be  forfeited. 

§  8.  While  the  St.  Louis  and  Iron  Mountain,  the  Cairo  and 

Fulton  and   the    Missouri  Valley  railroads  were  being  disposed 

1867.  "While  St.  Louis  and  St.  Joseph  have  been  sleeping  and  dreaming  as  if  in 
security,  Chicago  has  been  awake,  and  by  the  opening  of  spring  a  line  of  continuous 
railroad  will  be  opened  from  the  very  foot  of  the  Rocky  Mountains,  by  Omaha,  across 
Iowa  to  Chicago,  and  on  to  the  Atlantic."  Many  other  facts  concerning  the  general 
situation  as  to  railway  connections  are  mentioned,  which  indicate  that  traffic  was 
about  to  be  deflected  from  Missouri  lines.  It  is  urged,  however,  that  this  can  be 
averted  by  a  speedy  completion  of  the  Platte  Country  Railroad,  and  that  for  this  pur- 
pose St.  Joseph,  St.  Louis,  arid  all  the  state  should  assist  in  the  work,  and  the  legis- 
lature should  also  grant  further  aid.  In  the  same  article  it  is  argued  that  the  Hannibal 
and  St.  Joseph,  greatly  aided  by  the  state,  carries  trade  from  St.  Louis,  while  the 
Platte  Country,  with  no  aid  to  speak  of,  would  carry  trade  to  the  state. 
'  Laws  of  Missouri,  Adjourned  Session,  1868,  p.  107. 


l60  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

of,  attempts  were  also  being  made  to  dispose  of  the  North  Mis- 
souri. Like  some  of  our  trans-continental  lines,  in  seeking  at  an 
early  date  to  get  released  from  the  lien  held  by  the  general 
government  for  amounts  advanced  to  them,  this  road,  as  we  have 
seen  already,  had  sought  release  from  the  lien  held  by  the  state. 
Though  other  roads  in  connection  with  this  one  were  unsuc- 
cessful in  their  first  attempts  at  securing  a  release,  this  company, 
as  has  been  noted,  succeeded  February  lO,  1864,  in  obtaining  a 
release  to  the  extent  of  two  million  dollars  ;  and  later,  February 
16,  1865,  secured  another  to  the  extent  of  six  million  dollars. 
Consequentl}^  in  1867-8  this  company  could  come  forward  and 
ask  for  a  release  not  from  a  first  lien  but  only  from  a  second,' 
which  they  thought  was  not  asking  for  so  very  much  after  all. 

An  examination  of  the  condition  and  earning  capacity  of  the 
North  Missouri  Railway  will  enable  us  to  form  an  estimate  of  the 
value  of  the  property  upon  which  the  state  held  a  lien  for  six 
million  dollars.  Of  course,  during  the  war  the  road  was  operated 
in  the  face  of  many  hindrances.  However,  the  president  says 
in  a  report''  to  the  governor,  January  1865,  "Notwithstanding 
the  many  disadvantages  under  which  we  have  labored  during  the 
war,  the  loss  of  rolling  stock  which  was  not  sufficient  for  the 
wants  of  the  company  if  none  had  been  destroyed,  and  the  fact 
that  the  products  of  the  country  were  consumed  by  troops  " 
instead  of  being  shipped  out  of  the  country  so  as  to  increase  the 
business  of  the  railway,  "our  earnings  have  been  steadily 
increasing."  ^  It  must  also  be  taken  into  account  that  the  earn- 
ings (^911,286)  for  1864  are  smaller  than  they  would  have 
been,  had  it  not  been  for  the  destruction  of  the  road  by  one 
"  Bill  "  Anderson  by  order  of  the  Confederate  General  Price  in 
September  of   this  year.^     In  explaining  why  the  earnings  were 

^Democrat,  St.  Louis,  March  2,  1867. 

^  House  Journal,  j86_5.  Appendix,  p.  627. 

3   Gross  earnings  in  1862       ...----     ^438,434 

"  1863 636,245 

"  1864 911,286 

— See  House  Journal.  /S6s,  Appendix,  p.  652. 
*  Ibid.,  pp.  626-627. 


CONCLUSION  OF  THE  EXPERIMENT  OF  STATE  AID      l6l 

small  for  October  and  the  expenses  large,  the  company  reports 
that  "  this  was  the  month  after  Anderson's  destruction  of  our 
road.  .  .  .  Our  hands  had  to  be  kept  under  pay  ready  for 
use  or  we  should  lose  them,  and  when  wanted  could  not  regain 
them.  This  alone  cost  the  company  ^40,000."  '  Taking  this  in 
connection  with  the  loss  of  trafific  estimated  at  $60,000  by  the 
company^  as  a  result  of  the  disturbances  of  September  1864, 
the  earnings  $911,286  for  the  year  were  necessarily  $100,000 
below  the  amount  normally  to  be  expected.  Indeed  the  pres- 
ident says,  "  Our  total  interest  [due  the  state]  is  only  $261,000 
per  year  and  if  the  portion  of  the  road  now  built  was  fully  com- 
pleted and  properly  equipped  with  rolling  stock  it  would  earn 
the  interest  on  the  bonds  due  the  state  ;  "  3  however,  he  further 
says  the  "  net  earnings  must  be  applied  for  some  time  to  come  to 
increasing  the  engines  and  cars.  "  ■♦  Thus  the  same  disposition 
of  the  net  earnings  was  to  be  made  in  1865  as  had  been  made 
in  1863  ;  5  interest  due  the  state  was  not  to  be  paid  but  the  capac- 

'  House  Journal,  j86j,  Appendix,  p.  66l. 

^  Ibid.,  p.  652.  ^Ibid.,  p.  627.  ^  Ibid.,  p.  627. 

5  The  following  is  a  letter  from  the  president  of  the  Company  to  Hon.  L.  C. 
Marvin,  Speaker  of  the  House  of  Representatives,  in  response  to  a  resolution  of  the 
House  inquiring  into  the  financial  condition  of  the  railway  companies. 

"  Office  North  Missouri  Railway  Company, 
St.  Louis,  Feb.  11,  1863. 
It  should  be  stated  that  a  good  many  of  our  cars  were  burnt  by  rebels  [1861]. 
We  had  not  before  the  burning  took  place  over  about  half  enough  cars  to  do  the  business 
offered  to  the  road.  We  lost  much  business  this  fall  and  winter  by  want  of  cars. 
Feeling  this,  we  have  ordered  100  cars  to  be  built  and  four  locomotives;  and  the  iron  to 
be  purchased  to  lay  the  12^^  miles  of  track  that  is  graded  north  of  the  Hannibal  and 
St.  Joseph  Road.  If  the  moneys  here  reported  were  withdrawn,  we  could  not  pay  for 
the  cars,  locomotives  or  iron.  I  think  this  should  be  known  to  you,  to  enable  you  to 
act  understandingly.        With  great  respect,  your  obedient  servant, 

Isaac  H.  Sturgeon, 
President  and  Superintendent  North  Missouri  Railroad  Co. 

P.  S.  —  Cost  of  cars,  locomotives  and  iron. 

100  freight  cars,  $750     - %  75,000 

4  first-class  freight  engines,  delivered  in  St.  Louis,  $13,000  each      52,000 
15,000  tons  iron,  at  $70    per   ton,  delivered    on    the  road  above 

Macon        -         - 105,000 

Total ;5S232,ooo 


l62  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

ities  of  the  road  were  to  be  enlarged.  Out  of  1^285, 433  of 
net  earnings  which  we  shall  see  the  company  had  for  1864,  it 
could  have  paid  one  year's  interest,  and  had  ^24, 433  remaining.  ' 
A  certain  part  of  the  outlay  during  these  years  was  of  course 
necessary  for  repairs  ;  indeed  not  all  of  it  was  made  to  enlarge 
the  facilities  and  thereby  to  increase  the  earning  capacity  of  the 
road.  Although  in  1865  the  track  was  "in  very  fair  condition" 
it  needed  "a  large  number  of  new  ties  —  at  least  fifty  thousand  ;" 
and  a  large  number  of  rails  also  would  have  to  be  replaced  dur- 
ing the  coming  year.  The  engineer  was  "taking  rails  from  the 
side-track  to  repair  damaged  ones  in  the  main  track."  The  fencing 
along  the  road  in  many  places  needed  "  a  large  amount  of  repairs  " 
and  some  trestle  work  would  have  to  be  rebuilt  at  once.  The 
cost  of  rolling  stock  and  of  repairs  on  rolling  stock  required  at 
once  (January  1865)  would  amount  to  1^39 1,650,-  and  the  cost  of 
road  repairing  and  bridge  building  would  amount  to  ^102,500 
more,  making  in  all  a  necessary  immediate  outlay  of  $494,150.3 
It  would  not,  however,  have  been  a  difficult  matter  to  provide 
these  funds  in  the  short  space  of  not  more  than  two  years  if  the 
amount  of  net  earnings  of  the  road  during  nine  months  of  1864'* 
were  any  criterion  of  what  they  would  be  in  the  future.  Of 
$469,390  consumed  in  operating  expenses  and  repairs,  $168,583 
fell  to  repairs;  and  of  the  $238,465  net  earnings   for  these  nine 

The  net  earnings,  with  what  cash  we  now  have  on  hand,  will  enable  us  to  pay  for 
the  above,  and  do  other  necessary  work,  which  will  be  more  fully  set  out  in  a  report  to 
the  legislature,  which  will  be  laid  before  it  in  a  day  or  two.  I.  II.  S." 

— See  House  Journal,  Adjourned  Session,  1863-4,  part  2,  p.  757. 
'  See  below,  p.  31. 

^6  locomotives  ....  ^150,000 

80  combination  cars      ...  -         128,000 

28  platform  cars      -  .  -  .  22,400 

8  passenger  cais  -  -  -  -  40,000 

2  mail  cars  ....  8,000 

2  baggage  cars  -  .  .  -  5,000 

3  caboose  cars         ....  9,000 
For  reconstruction  of  rolling  stock        -             -           29,250 

^391.650 
— See  House  Jou7-nal,  1863,  Appendix,  p.  656. 
■ilbid.  '^  Ibid.,  p.  653. 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  163 

months,  ;^i  52,551  were  expended  in  making  the  kind  of  improve- 
ments above  spoken  of,  leaving  cash,  materials  and  government 
vouchers  on  hand  in  excess  of  the  amount  at  the  beginning  of 
me  nine  months  to  the  extent  of  ^85,914.^  The  net  earnings 
for  these  months  were  at  the  rate  of  ^26,495  P^*'  month,  which 
was  below  the  normal  rate  because  of  Anderson's  raid.  If  addi- 
tional proof  were  needed  to  show  that  the  North  Missouri  about 
the  time  of  the  close  of  the  war  was  becoming  to  be  a  very 
prosperous  road,  reference  might  be  made  to  the  report  of  the 
chief  engineer,  January  1865,  to  the  effect  that  the  road  during 
at  least  a  part  of  the  year  was  offered  double  the  amount  of 
business  it  was  capable  of  doing.^  If  the  business  of  the  road 
was  in  an  advancing  state,  then  the  capitalized  value  of  the 
road,  which  the  net  earnings  would  give  at  the  current  rate  of 
interest,  cannot  be  regarded  as  too  large.  In  1864  the  net 
earnings,  ^285,433,3  if  capitalized  at  7  per  cent.,  the  rate  of  inter- 
est on  the  first-mortgage  bonds  of  the  company  issued  under 
the   act    of   February   16,  1865, '^  would  make   the  value   of  the 

^  House  Journal,  i86j.  Appendix,  p.  654. 

^ "  For  the  last  three  months  a  constant  daily  demand  for  cars  for  transportation 
of  live  stock  and  merchandise  has  been  made  by  sliippers,  which  the  company  has 
been  utterly  unable  to  supply,  causing  much  complaint  and  dissatisfaction  among  the 
patrons  of  the  road.  We  have  not  been  able  to  bring  to  market  even  the  hogs  that 
Jiave  been  offered  for  shipment,  to  say  nothing  of  pound  freight,  and  the  consequence 
is  that  they  have  sought  other  markets  by  thousands.  As  our  trains  have  been  loaded 
witli  hogs,  which  cannot  be  driven  any  great  distance,  cattle  have  kept  away  from 
our  road,  and  were  driven  rather  than  wait  for  us  to  bring  them  to  market.  I  think 
there  is  no  exaggeration  in  the  statement  that  we  have  not  done  more  than  one-half  of 
the  business  offered  for  the  past  three  months  and  this  will  happen  every  winter  until 
the  road  is  fully  equipped." — House  Journal,  /86s,  Appendix,  p.  655;  see  also  letter 
from  the  president  of  the  road  (February  1863)  to  very  much  the  same  effect,  above 
p.  28. 

3  This  amount  is,  if  anything,  smaller  than  the  actual  amount.  The  gross  earn- 
ings for  the  whole  year  and  for  a  given  nine  months  appear  in  the  report,  but  expenses 
are  given  for  only  the  nine  months.  The  gross  earnings  for  the  whole  year  do  not 
keep  up  at  the  rate  for  the  nine  months.  However,  we  have  computed  the  expenses 
for  the  whole  year  at  the  rate  for  the  nine  months,  and  have  taken  the  difference 
between  this  amount  and  the  actual  earnings  for  the  whole  year.  The  net  earnings 
thus  computed,  barring  extraordinary  causes  for  increase  in  expenses,  and  none  such 
are  reported,  cannot  be  too  large.     See  House  Journal,  1863,  Appendix,  pp.  652-654. 

*Laws  oj Missouri,  i8bs,  p.  90. 


164  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

North  Missouri  Railway  $4,077,614.  Tiie  net  earnings  for  this 
year  amounted  to  3.8  per  cent,  on  the  whole  amount  ($7, 456, 744, 
principal  and  interest)  invested  in  the  railway.'  In  1866  the  rate 
of  net  earnings  was  not  quite  so  large  as  in  1864,  being  only  3.2 
per  cent,  on  the  investment.^  The  value  of  the  railway,  if  based 
on  the  net  earnings,  $272,884,  in  1866,  capitalized  at  7  per  cent, 
would  have  been  $3,898,342. 

However  the  question  which  concerned  both  the  state  and 
the  railways  at  this  time  was  not,  it  seems,  what  the  railways 
were  worth,  but  how  to  sever  the  connection  of  the  state  with 
enterprises  which  had  never  been  anything  but  a  source  of 
trouble  and  of  financial  loss,  and  thus  to  prepare  the  way  for  the 
extension  of  the  long  delayed  railways  under  private  manage- 
ment. To  be  sure,  if  there  was  anything  to  be  gained  by  a 
release  from  the  state  lien,  the  North  Missouri  Company  would  be 
just  as  quick  to  see  it  as  would  any  other  company.  Of  the  five 
million  dollars  3  of  first-mortgage  bonds  issued  under  the  act  of 
February  16,  1865,  the  company  had  sold  only  a  small  part, 
but  had  arranged  with  the  contractors  of  that  part  of  the  road 
north  of  the  Hannibal  and  St.  Joseph  to  take  bonds  at  the  rate 
of  eighty-five  cents  on  the  dollar. ■♦  Although  only  a  small  part 
of  the  bonds  issued  had  been  sold  even  by  April  1867,  the 
company  earlier  in  the  year  had  expected  that  the  sale  of  the 
whole  would  be  completed  by  midsummer,  and  that  the  proceeds 
would  be  expended  without  completing  the  railway. ^  It  was  at 
this  time  (March  1867)  that  the  company  purposed  to  become  fully 
released  from  the  burden  of  even  a  second  lien  in  the  hands  of  the 
state.  Inasmuch  as  only  a  small  part  of  the  five  million  dollars 
issue  of  bonds  had  been  disposed  of  attention  must  be  again 
called  to  the  financial  problem  in  connection  with  this  railway  which 
confronted  the  state.  The  engineer  stated  in  a  published  report' 
that   the   interest   on   the   first-mortgage   bonds,   when  all    were 

'  See  Table  IV.  Appendix  i.  '^  Ibid, 

'i  Democrat,  St.  Louis,  March  2,  1867. 
^Missouri  Republican,  April  6,  1867. 
^Democrat,  St.  Louis,  March  2,  1867.  ^ Ibid. 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  165 

issued,  would  be  $420,000,  that  the  net  earnings  of  the  road  at 
that  time  ($35,000  annually)  would  not  pay  one-fourth  of  this 
amount,  and  if  the  company  were  dependent  upon  this  source  it 
would  default  in  interest  the  following  July,  and  there  would  be 
consequently  a  sale  of  the  road  under  the  first  mortgage  of  five 
million  dollars,  and  that  the  sale  would  cut  the  state  out  of 
every  dollar,  because  she  had  only  a  second  mortgage.  The 
company  proposed,  said  the  engineer,  to  pay  $200,000  into  the 
treasury,  and  agreed  to  furnish  money  enough  to  complete  the 
road  in  a  reasonable  time.  The  engineer  estimated  that  it  would 
require  $1,518,000  to  complete  and  equip  the  main  road  and 
branch,  and  said  that  this  money  could  not  be  raised  with 
the  second  mortgage  hanging  over  the  road.  To  be  sure  the  net 
earnings  of  the  road  would  be  only  $35,000  if  the  amounts 
expended  for  construction  should  be  included  under  operating 
expenses  and  repairs.'  And  even  reckoning  the  amounts 
expended  for  these  matters  in  1867  as  chargeable  to  the  expenses 
of  that  year,  the  net  earnings  of  the  road  would  then  be,  accord- 
ing to  a  published  report,^  $67,801,  which  capitalized  at  7  per 
cent,  would  make  the  railway  worth  nearly  one  million  dollars. 
Moreover  the  roadbed  and  rolling  stock  in  the  early  part  of 
1867  were  in  good  order.  As  the  company  was  at  this  time 
pleading  with  St.  Louis  capitalists  to  take  two  million  dollars  of 
its  bonds, ^  a  party  of  business  men  from  St.  Louis  made  a  trip, 
April  30,  over  the  railway  as  far  as  Moberly,  for  the  purpose  of 
inspecting  it.'^  The  party  says  :  "The  condition  of  the  road  as  far 
as  passed  over  was  found  to  be  most  excellent,  as  was  that  of  the 
engines,  rolling  stock,  and  the  like  seen  by  the  party;"  and  "as 
a  result  of  this  cursory  survey  all  agreed  that  the  North  Mis- 
souri Railway  was  one  of  the  most  valuable  in  the  state  for 
assisting  in  dev^eloping  its  agricultural  and  other  interests." 
Although   at   the   time    these  statements  were  made  concerning 

"See  Senate  Journal,  1867,  Appendix,  p.  881  ;  also  Table  IV,  Appendix  I. 

*  Senate  Journal,  1867,  Appendix,  p.  881. 

^Missouri  Republican,  April  6,   1867. 

■•See  article,  "Trip  over  the  North  Missouri  Railroad,"  Ibid.,  May  3,  1867. 


1 66  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

the  North  Missouri  the  public  mind  was  considerably  agitated 
because  of  the  scandalous  reports  regarding  the  sale  of  the  St. 
Louis  and  Iron  Mountain  and  Cairo  and  Fulton  railways, 
nothing  had  as  yet  transpired  in  relation  to  the  North  Missouri 
to  lead  men  to  distort  facts  concerning  it.  The  most  weighty 
argument  in  proving  that  this  road  was  in  a  growing  condition 
and  that  it  would  soon  be  able  to  meet  its  interest  dues,  is  that 
the  company  was  constantly  required  to  add  rolling  stock  in 
order  to  be  able  to  do  the  business  offered  to  the  road.  In  1867 
the  amount  of  rolling  stock  owned  by  the  company  was  much 
greater  than  in  1865,'  and  although  the  gross  earnings  in  1867 
were  slightly  smaller  than  in  1865,  the  greater  amount  of  rolling 
stock  would  indicate  that  the  normal  condition  of  affairs  was  that 
of  an  increasing  traffic. 

To  sum  up,  it  appears  that  the  North  Missouri  Railway 
Company  as  early  as  1865,  barring  expenses  for  further  con- 
struction, could  have  paid  the  whole  of  the  annual  interest  due 
to  the  state  for  that  year  and  have  had  a  surplus  of  $24,000 
remaining.^  Although  it  was  in  accordance  with  sound  busi- 
ness methods  to  apply  net  earnings  to  the  development  of 
the  earning  capacity  of  the  railway ,3  yet  the  cost  of  such 
improvements  could  not  properly  be  charged  to  any  given 
year's  income ;  and  the  demand  for  such  an  increase  was  the 
very  best  indication  that  sooner  or  later  the  company  would 
be  able  to  meet  all  interest  charges  against  it.  The  case 
seemed  to  be  just  this.  The  company  had  the  right  to  issue 
six  million  dollars  of  first-mortgage  bonds,  and  it  owed  the 
state  just  about  six  million  dollars.  The  interest  on  the 
first-mortgage  bonds  when  all  sold    would    be,   at  the    rate  of 

I   Rolling  stock  on  hand  1865  1867 

Engines             ......  20  26 

Passenger  cars                     -           ■  -              -              -  13  27 

Baggage,  mail,  and  express  cars           ...  6  9 

Freight  and  other  cars       -              -              -              -  21 1  375 

See  Senate  Journal,  1S67,  Appendix,  p.  881  ;  also  House  Journal,  i86j.  Appen- 
dix, pp. 657-658. 

'See  above,  p.  162. 

^  House  Journal,  1863,  Appendix,  p.  654. 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  1 6/ 

7  per  cent.,  $420,000;  the  interest  due  on  the  state  bonds 
then  outstanding  would  be  only  about  $360,000,  counting 
interest  on  accrued  interest.  The  company  wanted  to  apply 
the  net  earnings  of  the  road  to  the  further  extension  of  the 
railway  instead  of  being  obliged  to  use  up  their  income  in  pay- 
ing interest  on  the  six  million  dollars  of  state  bonds.  The  net 
earnings  of  the  railway,  however,  just  as  it  was,  without  further 
extension,  would  very  soon  have  paid  all  the  interest  due  the 
state  ;  and  a  capable  and  determined  state  administration  could 
have  enforced  in  the  course  of  time  the  payment  of  the  entire 
obligation  due  the  state ;  at  least  so  it  seems  to  the  writer 
from  a  study  of  the  capacity  of  the  road  as  given  in  the  pre- 
ceding pages.  This  being  the  case,  there  were  two  courses 
open  to  the  state:  either  (i)  to  apply  pressure  to  the  com- 
pany and  force  the  payment  of  the  debt,  or  (2)  to  release  the 
lien  in  order  to  help  the  company  to  extend  the  main  line  to 
the  northern  boundary  of  the  state  and  the  West  Branch  to  the 
western  boundary.  The  latter  course  would  free  the  state 
from  its  connection  with  the  road,  and  secure  to  the  community 
about  two  hundred  miles  of  additional  railway  ;  but  it  would  at 
the  same  time  throw  a  debt  of  more  than  six  million  dollars 
upon  the  state.  Notwithstanding  this  fact  the  state  adopted 
this  course,  and  released  the  second  lien  of  $6,960,000  for  the 
nominal  sum  of  $200,000,^  a  sum,  as  we  have  seen,  proposed  by 
the  company  itself.^  The  conditions  upon  which  the  lien  was 
released  were  (i)  the  completion  of  the  main  line  to  the  nor- 
thern boundary  of  the  state  in  nine  months,  (2)  the  extension 
of  the  West  Branch  to  the  western  boundary  of  the  state  in 
eighteen  months,  and  (3)  the  erection  of  a  bridge  over  the  Mis- 
souri River  at  St.  Charles  within  three  years  from  the  date  of 
the  release  (March  17,  1868).  Whether  or  not  the  state  selected 
the  better  of  the  two  possible  courses  in  dealing  with  the  North 
Missouri  Railway  may  be  decided  on  the  same  general  prin- 
ciples as  those  upon  which  the  larger  question  of  the  continued 

^  Laws  of  Missouri,  Adjourned  Session,  1868,  p.  112. 
^See  above,  p.  165. 


1 68  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

connection    of   the   state  with  railway  enterprises  after  the  close 
of  the  war  is  decided.' 

The  South  West  Branch  of  the  Pacific,  as  we  have  seen,  was 
first  disposed  of  May  12,  1866,  in  accordance  with  the  act  of 
February  19,  preceding;  General  John  C.  Fremont  purchased  the 
road  for  the  sum  of  1.3  million  dollars.^  Some  months  later. 
General  Fremont  attempted  to  float  two  million  dollars  of  bonds 
for  the  purpose  of  further  extending  the  railway.  In  advertising 
the  railway  and  the  lands  belonging  to  it  he  certainly  gave 
extraordinary  values  to  both  ;  he  placed  the  value  of  the  railway 
when  completed  at  12  million  dollars,  and  the  1,036,000  acres 
of  land  belonging  to  the  company  at  ten  million  dollars,  mak- 
ing a  grand  total  of  22  million  dollars.^  That  there  could  not 
be  such  a  grand  total  of  wealth  represented  by  the  railway 
and  its  lands  it  is  needless  to  say  all  capitalists  would  plainly 
see.  The  seventy-seven  miles  of  railway  completed  represented 
a  certain  sum,  say  1.3  million  dollars,  the  purchase  price.  The 
funds  for  the  completion  of  the  remaining  part  of  the  road  had 
to  be  obtained  by  mortgaging  the  lands  and  the  portion  of  the 
road  already  built.  Thus  the  value  of  the  completed  railway  would 
continue  the  same  as  that  of  the    lands  and  the  portion  already 

'  See  below,  pp.  226  ei  seq. 

""  Auditor's  Report,  1SS3-4,  part  2,  p.  97. 

3  The  advertisement  {Daily  Missouri  Democrat,  St.  Louis,  December  17,  1866,  and 
January  18,  1867)  reads  as  follows: 

77  miles  completed  road  now  in  operation  to  RoUa,  cost  -  -  $4,500,000 

13  miles  graded  with  material  on  hand  at  a  cost  of         -         -         .         -  500,000 

Together  with  260,000  acres  of  land  now  being  disposed  of  at  a  minimum  of 

$5  per  acre  (maximum  $40) -       1,300,000 

;86,3oo,ooo 

When  completed  it  will  present  a  road  of  310   miles   in  length  costing 

about ;?i2,ooo,ooo 

With  1,036,000  acres  of  land  valued  at 10,000,000 

Showing  a  total  value  of         -  -  -  -  -  -  -  -  $22,000,000 

[Signed]         Ward  and  Company,  Bankers, 

No.  54  Wall  street,  New  York. 

The  advertisement  further  states  that  this  road  connects  with  eastern   railways  and 
runs  through  "  the  most  attractive  parts  of  the  state  of  Missouri." 


CONXLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  1 69 

completed.  Therefore  to  count  the  finished  road  and  the  lands 
as  each  forming  a  part  of  the  total  v^alue  of  the  property  of  the 
company,  was  a  misrepresentation  too  transparent  to  deceive  any 
one.  The  advertisement  was  not  successful,  though  continued 
for  a  month  or  more,  and  no  large  amount  of  bonds  was  sold.' 
As  the  road  and  lands  were  not  wanted  at  a  high  price  by  capi- 
talists, the  favorable  statements  of  the  papers'  and  of  the  enthusi- 
astic friends 3  of  the  railway  and  the  state  were  of  no  avail.  Such 
means  could  not  replace  capital  and  brains  as  the  necessary  fac- 
tors in  the  construction  of  a  railway.  Even  during  the  time  of 
the  advertisement  in  the  Democrat,  General  Fremont  became 
convinced  that  he  could  never  pay  out  and  therefore  sold  the 
property  for  just  what  he  had  paid  for  it. 

The  new  owners  of  the  road,  becoming  convinced  in  a  short 
time  that  their  bargain  was  a  bad  one,  proceeded  to  Jefferson 
City,  the  Mecca  of  all  distressed  railway  builders  in  Missouri  in 
these  times,  to  ask  that  the  time  for  the  completion  of  the  road 
be  extended. +  The  members  of  the  legislature  from  the  south- 
western part  of  the  state,  because  of  great  demand  in  the  south- 
west for  a  railway,  offered  to  exert  themselves  to  secure  further 
aid  for  the  company  when  it  proceeded  to  the  construction  of 
the  railway,  but  refused  to  help  secure  an  extension  of  time. 
Matters  went  from  bad  to  worse  till  June  15,  1867,  when  the 
company  failed  to  meet  the  second  annual  installment. s  Gover- 
nor Fletcher  then   took   possession   of   the   road   and   appointed 

^  Alissouri  KepiMican,  April  26,  1867. 

-Democrat,  St.  Louis,  January  23,  1867. 

3  In  an  article  on  "  PVemont  and  the  South  West  Branch  "  in  Missouri  Republican, 
April  26,  1867,  "  An  Absent  Taxpayer  of  Missouri  "  values  the  railway  and  its  lands  at 
II  million  dollars. 

■•  The  Jefferson  City  correspondent  to  the  Democrat,  St.  Louis,  January  9,  1867, 
says:  "  General  Pile  is  here  on  business  for  the  South  Pacific  Railroad  Company  of 
whose  road  he  is  superintendent.  The  company  think  that  they  paid  too  much  for  the 
road,  in  view  of  their  obligation  to  complete  it,  though  it  was  transferred  to  them  by 
Fremont  for  the  sum  at  which  it  was  bought  by  him,  he,  it  is  declared,  receiving  only 
$100  for  the  transfer.  The  transfer  was  contemplated  when  he  became  pur- 
chaser."    Then  follows  a  plea  for  aid. 

^Democrat,  St.  Louis,  June  24,  1867. 


I/O  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

General  Clinton  B.  Fisk  to  operate  it  till  it  could  be  sold. 
Following  the  failure  of  the  company  to  build  the  railway,  the 
southwestern  part  of  the  state  demanded  very  earnestly  that  the 
legislature  take  some  active  steps  which  would  lead  to  the  con- 
struction of  the  much  needed  railway.'  The  road  continued  to 
be  operated  by  the  agent  of  the  state  while  further  efforts  were 
made  to  dispose  of  it.  The  receipts  of  the  South  West  Branch 
under  the  management  of  the  state  agent  were  little  more  than 
sufficient  to  cover  the  expenses  and  the  cost  of  repairs.  However 
no  small  part  of  this  expense  was  incurred  in  making  extensive 
repairs  on  the  rolling  stock  and  in  placing  the  track  in  "most 
excellent  condition."^ 

It  is  not  necessary  to  trace  the  course  of  all  the  measures 
introduced  into  the  legislature  during  the  winter  of  1868  to  dis- 
pose of  the  South  West  Branch.  There  were  various  projects  put 
on  foot  by  separate  individuals  or  bodies  of  men  to  get  control 
of  the  railway.  The  two  chief  competitors  for  the  railway  seem 
to  have  been    the   representatives    of   Chouteau,    Harrison   and 

'  fee  letter  concerning  the  needed  road  in  Z>^/«(7(rra/,  June   27,    1867;  proceedings 
of  a  railroad  meeting  in  Springfield,  July  8,  1867,  Democrat,  July   16,  1867  ;  also  senti- 
ment of  the  papers  in  the  southwest  which  earnestly   ask   for  an  extra  session   of  the 
legislature  to  enable  the  road  to  be  placed  as  soon  as  possible  in  the  hands  of  reliable 
men.  —  Democrat,  July  9,  1867  ;  and  an  account  of  a'mass  meeting  in  Springfield,  July 
17,  1867,  attended  by  Governor  Fletcher  and  Colonels  Baker,  Oilman  and  Grosvenor, 
Democrat,  July  18,  1867. 

"The  following  report  of  the  management  of  the  road  of  the  South  West  Branch 
by  the  state  agent  covers  only  the  time  between  June   15,  1867,  and  January  4,   1868, 
the  date  of  the  report.     Nothing  further  is  to  be  learned  of  the  earning  capacity  of  the 
road,  as  it  was  turned  over  to  a  private  company  on  the  i8th  of  March  following,  and 
this  company  was  under  no  obligation  to   make   such  reports  as  had  been  heretofore 
made  and  if  any  were  made  they  were  not  published. 
Aggregate  receipts  (June  15,  1867-Jan.  4,  1868)  ....         #118,970.83 

Expenses:  (i)  running  expenses,   balance  $54^2  due   the   Pacific  Railroad, 

repairs  and  materials  purchased         .......        93,471.09 

(2)  back  pay  due  employees  when  road  fell  into  hands  of  the  state  -         18,535.29 

Total  expenses         ........      #112,006.38 

Balance         --..-.-  .  #     6,964.45 

The  company  also  owed  the  balance  (not  stated)  due  the  Pacific  Railroad  for 
freights  in  November  and  December,  1867.  — See  House  and  Senate  Journals, 
Adjourned  Session,  1S6S,  Appendix,  p.  143. 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  I /I 

Valle,  a  St.  Louis  mercantile  firm,  and  those  of  Fox,  Baker  and 
Company,  whose  standing  has  not  been  determined.  There  were, 
however,  other  bidders  for  the  road.  Capitalists  from  Boston 
and  New  York  became  interested  and  two  gentlemen  from 
Boston  visited  the  state  on  this  account.  These  gentlemen  were 
reported  to  have  raised  a  cash  subscription  of  two  million  dollars 
for  the  purchase  of  the  railway.'  And  the  great  publicity  given 
to  the  propositions  of  the  Boston  gentlemen,  which  were  so  much 
better  than  those  made  by  some  of  the  other  competitors  for  the 
property,  "led  to  propositions  from  other  quarters"  raising  the 
amount  offered  for  the  railway  according  to  the  terms  of  the 
Senate  bill  then  being  discussed.^  Although  the  offer  of  the 
capitalists  from  Boston  added  interest  to  the  matter  of  disposing 
of  the  road,  possibly  leading  the  former  competitors^  to  bid  in  a 
little  more  lively  fashion,  no  one  of  the  competitors  was  suc- 
cessful in  securing  the  award  of  the  property.  It  seems  that  all 
finally  agreed  to  form  a  single  company,  and  to  purchase  the 
railway  and  lands.  The  second  section  of  the  act  disposing  of 
the  railway  contains  among  others  the  names  of  almost  all  of 
the  individuals  competing  for  the  railway  even  to  the  name  of 
one  of  the  gentlemen  from  Boston. ■♦     Among  the  grantees  of  this 

'See  editorial  va.  Democrat,  "^^^  Louis,  February  15,  1868,  which  says  in  part: 
Andrew  Pierce  and  Francis  B.  Hayes  of  Boston  arrived  in  our  city  yesterday.  These 
gentlemen  are  reported  to  be  looking  after  the  South  West  Branch  Railroad,  and  it  is 
said  they  have  raised  a  cash  subscription  of  two  million  dollars  for  purchasing  the  road. 
We  have  no  specific  information  "  as  to  the  kind  of  proposition  which  these  gentlemen, 
with  their  associates,  Messrs.  Kidder,  Peabody  and  Co.,  bankers,  and  Mr.  Benjamin  Bates, 
President  of  the  Bank  of  America  in  Boston,"  are  able  to  make,  but  if  they  are  pre- 
pared to  do  what  it  is  claimed  they  can  do,  the  General  Assembly  should  not  act 
hastily  in  disposing  of  the  road. 

Another  and  separate  offer  of  one  million  five  hundred  thousand  dollars  for  the 
road  seems  to  have  been  provisionally  made  by  parties  in  New  York. — Democrat, 
February  18,  1868. 

-Correspondence  from  Jefferson  City  in  Democrat,  St.  Louis,  February  20,  1868. 

?"  South  West  Branch  Railroad  matters  are  demoralized  by  the  arrival  of  a 
delegation  in  the  interest  of  the  Chouteau,  Harrison  and  Valle  projects.  The  Fox- 
Baker  project  is  not  now  considered  so  sure  of  success  as  it  was  recently." — Cor- 
respondence from  Jefferson  City,  De7tiocrat,  St.  Louis,  February  29,  1868. 

••The  grantees  were  :  A.  C.  Kingsland  and  Son,  G.  D.  Craigin,  Freeman  Clarke, 
A.  S.  Diven,  Ben.   HoUaday,  E.  H.  Greene,  N.  Randall,  \V.  H.  Coffin,  Lewis  Seyle, 


172  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

railway  were  A.  S.  Diven,  a  former  contractor  on  the  South  West 
Branch,  General  C.  B.  Fisk,  formerly  the  state  agent  operating 
the  railway,  and  others  prominent  in  politics  at  the  time.  The 
act  disposing  of  the  South  West  Branch  became  a  law  on  the  17th 
of  March,  1868,'  the  day  on  which  we  have  seen  the  legislature 
finally  disposed  of  the  St.  Louis  and  Iron  Mountain,  the  Cairo 
and  Fulton,  the  Platte  Country,  and  the  North  Missouri  rail- 
roads. The  act  granted  the  road  and  lands  in  fee  simple  to  a 
company  to  be  organized  for  the  purpose  of  extending  the  rail- 
way to  the  western  boundary  of  the  state.  The  purchasers  or 
grantees  of  the  South  West  Branch  were  to  organize  themselves 
into  a  new  company  to  be  known  as  the  South  Pacific  Railroad 
Company.  This  company  was  required  to  expend  in  extending 
the  railway  the  sum  of  $500,000  within  one  year  after  accepting 
the  terms  of  the  act.''  The  railway  was  to  be  completed  to  the 
town  of  Lebanon,  Laclede  county  (in  two  years)  to  Springfield  in 
three  and  one-half  years,  from  the  date  of  the  act,  and  to  the 
western  boundary  of  the  state  in  Newton  county  by  June 
10,  1872.3     As  a  guarantee  that  the  railway  would  be  extended 

A.  C.  Wilder,  T.  C.  Bates,  J.  B.  Gray,  G.  V.  Fox,  C.  B.  P^isk,  D.  A.  January,  James  J. 
O'Fallon,  Charles  M.  Elleard,  Charles  P.  Chouteau,  James  Harrison,  Erastus  Wells, 
E.  S.  Rowse,  M.  D.  Reese,  Andrew  Pierce,  Jr.,  J.  J.  Dixwell,  Thomas  W.  Peirce, 
Dwight  Durkee,  Louis  G.  Fisher  and  James  B.  Hodgskin. —  See  Laws  of  Missouri. 
Adjourned  Session,  /868,  p.  118. 

^  Laws  of  Missouri,  Adjourned  Session,  /868,  p.  126. 

^  The  amount  of  ^60,000,  which  the  company  would  have  to  pay  for  the  settlement 
of  claims  not  paid  by  Fremont  for  work  done  and  materials  furnished  on  the  railway 
west  of  Rolla,  when  the  railway  was  in  his  control,  was  to  be  counted  as  forming  part 
of  the  necessary  expenditure  of  $500,000  for  the  first  year.  This  amount  of  $60,000 
would  come,  however,  out  of  the  settlement  of  balances  due  by  purchasers  of  lands 
from  General  Fremont.  The  amount  of  land  sold  to  settlers  or  donated  for  school 
purposes  by  General  Fremont  was  reserved  by  the  state  and  not  granted  to  the 
new  company.  This  amount  located  between  the  line  which  divides  sections  four  and 
five  of  townships  in  range  two  west  of  the  fifth  principal  meridian,  and  a  point  one 
hundred  miles  from  the  town  of  Franklin  on  the  line  of  the  South  West  Branch  would, 
however,  not  be  allowed  to  exceed  18,479  acres.  The  sums  remaining  unpaid  on  these 
lands  were  to  be  paid  to  a  commissioner  appointed  by  the  governor,  and  then  by  him 
paid  into  the  treasury  of  the  state.  The  treasurer  was  then  to  transmit  these  funds  to 
the  South  Pacific  Railroad  Company  to  reimburse  the  company  for  the  payment  of  the 
$60,000  in  balances  unpaid  by  General  Fremont. 

3  In  case  Congress  could  be  prevailed  upon  to  extend  the  time  of  the  land  grant 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  I  73 

in  accordance  with  the  terms  of  the  act,  the  company  was 
required  to  deposit  with  the  treasurer  of  the  state  in  a  bank 
named  for  the  purpose  the  sum  of  1,5  million  dollars  in  the  bonds 
of  the  United  States  or  of  the  state  of  Missouri.  This  sum  could 
be  withdrawn  in  blocks  of  $100,000  each,  but  only  to  be 
expended  in  the  extension  of  the  railway  ;  and  of  the  amount, 
the  sum  of  $250,000  was  to  be  retained  to  aid  in  the  construc- 
tion of  that  portion  of  the  road  west  of  Springfield.  This  com- 
pany was  also  to  file  a  bond  in  the  sum  of  one  million  dollars  with 
the  state,  the  amount  of  which  could  be  collected  in  case  the 
company  failed  to  comply  with  the  terms  of  the  act.  The  only 
direct  and  tangible  return  for  the  railway  required  by  the  act 
was  that  the  company  should  pay  to  the  treasurer  of  the  state 
for  the  state  interest  fund  the  sum  of  $300,000  in  three  annual 
installments,  beginning  June  i,  1874.  To  secure  funds  for  the 
extension  of  the  road  the  company  was  granted  the  right  to  issue 
$7,250,000  in  bonds,  based  upon  the  road  and  lands  as  security. 
The  company  could  sell  any  of  the  lands  granted  to  it  only  upon 
condition  that  it  would  apply  the  funds  to  the  extension  of  the 
railway.  Up  to  this  time  this  railway  had  been  a  branch  road 
leaving  the  main  line  of  the  Pacific  at  Franklin  (now  called  Pacific 
City)  thirty-seven  miles  from  St.  Louis.  The  act  of  March  18, 
1868,  gave  the  new  company  the  right  to  construct  a  railway 
commencing  at  or  near  the  intersection  of  Washington  and 
Grand  Avenues  in  the  city  of  St.  Louis,  running  westward 
through  the  county  of  St.  Louis  and  connecting  with  the  eastern 
terminus  of  the  former  South  West  Branch  at  Pacific  City. 

§  10.  During  the  time  in  which  the  disposition  of  all  the  rail- 
ways, as  discussed  in  the  preceding  pages,  engaged  the  attention 
of  the  legislature,  efforts  were  being  made  to  secure  a  release  of 
the  lien  held  by  the  state  on  the  Pacific  Railroad.  During  the 
regular  session  of  1867  bills  had  been  introduced  which  seemed 
to  indicate  that  the  legislature  would  dispose  of  the  Pacific  Rail- 

for  one  year  or  more,  the  company  should  then  have  five  years  in  which  to  complete 
the  road  to  the  western  boundary  of  the  state. —  See  sec.  4,  act  of  March  17,  186S,  La7vs 
of  Missouri,  Adjourned  Session,  j868,  p.  1 1 8. 


1/4  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

road  for  the  sum  of  four  million  dollars.'  This  fact  proved  later 
to  be  of  great  interest  to  the  owners  of  the  railway  because  it 
led  them  to  believe  that  for  a  sum  of  about  this  amount  they 
could  secure  a  release  from  the  lien  held  by  the  state.  To 
understand  the  situation  of  the  Pacific  Railway,  it  is  necessary, 
as  in  the  case  of  those  already  considered,  to  arrive  as  nearly 
as  possible  at  the  value  of  the  road.  It  seems  that  that  during 
the  winter  of  1867  its  value  was  put  somewhere  between  four 
million  dollars  ^  and  a  little  more  than  ten  million  dollars.  In 
a  letter  speaking  of  the  offer  of  ^10,450,000^  for  the  railway 
by  the  Union  Pacific  Railway  Company,  Mr.  Branscomb,  the 
chairman  of  the  House  committee  on  Internal  Improvements 
offers  some  good  reasons  why  the  state  should  sell.  Indeed,  in 
case  the  state  could  sell  for  such  a  price,  the  only  possible 
argument  for  not  selling  would  be  that  possibly  the  state  could 
operate  the  road  as  a  state  enterprise  so  as  to    make   more  out 

'The  Democrat,  P^bruary  4,  1867,  says  editorially  concerning  the  bill  before  the 
legislature  relating  to  the  Pacific  Railroad  that,  if  it  contains  features  such  as  our  cor- 
respondent refers  to,  it   cannot  meet   the  approval  of  the   legislature.     "  The  Radical 
members  at  least  will  not  be   ready  to   forget  that  provision  of  the  new  constitution 
which  declares  that  no  more  of  the  property  of  the  state  shall  be  relinquished  by  the 
legislature  without   being  fairly  and  honestly  paid  for  in  money.     The  sooner  the  legis- 
lature makes  known  its  determination  to  abide   by  this  provision,  the  better  it  will  be 
for  the  credit  of  the  state  both  financially  and  morally ;  "  see  also  concerning  Valle's 
bill  in  which  the  price  is  put  at  four  million  dollars. — Democrat,  March  11,  1867. 

^  See  estimate  of  William  McPherson,  Democrat,  March  11,  1867,  putting  the  value 
at  four  million  dollars.     It  seems   according   to  newspaper   correspondence  that  the 
Union  Pacific  Railroad  Company  made  two  widely  varying  offers  for  the  road.    In  the 
Democrat,  March  9,  1867,  it  is  stated  that  Mr.  Perry,  the  president  of  the  Union  Pacific 
Railroad,  General  Palmer,  the  treasurer,  and  others,  offered  to  pay  four  million  dollars 
to  the  state, ^700,000  to  St.  Louis  county,  and  to  assume  1.5  million  dollarsof  Dresden 
bonds,  making  in  all  6.2  million  dollars. 

3  According  to  this  letter  the  Union  Pacific  offered  to  pay  the  following  amounts  : 
First-mortgage  bonds      .         .         .         .  $1,500,000 

To  the  state  of  Missouri     -         -         -         -  4,000,000 

For  repairs     ------  1,500,000 

Debt  of  St.  Louis  county  -         -         -         -  700,000 

To  stockholders  at  50  per  cent,  on  their  stock 

in  U.  P.  stock  ...         -  1,750,000 


Total  - 10,450,000 

— See  Democrat,  St.  Louis,  March  23,  1867. 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  1 75 

of  it  both  for  the  treasury  of  the  state  and  for  the  community 
at  large  than  by  selling  it.  However,  no  evidence  that  such  an 
alternative  was  for  a  moment  discussed  has  been  found. 

It  was  during  the  time  that  the  above  offers  were  being 
made  that  the  stockholders  of  the  company  became  greatly 
alarmed  lest  the  road  would  be  sold  to  capitalists  foreign  to  the 
state'  and  they  thus  be  left  holding  an  empty  bag.  And  when 
the  bill  for  the  sale  of  the  road  was  introduced  at  the  adjourned 
session  of  1868  the  stockholders  exhibited  again  the  same  anxiety 
concerning  the  taking  over  of  the  road  by  foreign  capital.''  If 
the  road  was  to  be  sold  at  a  bargain  the  stockholders  felt  as  if 
they  ought  to  have  the  first  chance  at  it. 

Notwithstanding  some  real  and  worthy  offers  for  the  Pacific 
Railroad,  the  regular  session  of  1867  adjourned  without  effecting 
a  sale.  However,  the  idea  that  the  state  should  release  herself 
from  all  her  railway  enterprises  was  in  the  air ;  it  had  been  seen 
how  busy  the  adjourned  session  of  1868  was  with  the  disposition 
of  the  other  railways  upon  which  the  state  held  a  lien.  That 
the  Pacific  Railroad  also  would  be  disposed  of  at  this  session 
was  almost  a  foregone  conclusion.  Consequently,  very  soon  after 
the  opening  of  the  adjourned  session,  a  committee  was  appointed 
to  investigate  the  books  and  accounts  of  the  Company,  so  as  to 
find  out  what  the  value  of  the  road  was.^  This  committee  went 
very  thoroughly  into  the  matter  and  from  the  very  elaborate 
report '»  made,  the  value  of  the  road,  if  based  upon  its  earning 
capacity,  exceeded  by  far  the  four  million  dollars  asked  for  it  by 

'See  letter  signed  by  "  P,"  Republican,  March  25,  1S67,  asking  a  full  attendance 
at  a  stockholders'  meeting  to  discuss  the  sale  of  tie  road  and  to  prevent  foreign  capital 
from  getting  control  of  it.  The  letter  also  says  that  the  state  ought  to  give  the  stock- 
holders a  better  shovi^  than  foreign  capitalists. 

See  also  article  by  "G,"  Democrat,  March  30,  1867,  in  which  it  is  argued  that  if 
the  state  releases  her  lien  the  stockholders  should  have  the  advantage. 

^See  communication  by  "Justice,"  Republican,  February  8,  1868,  saying  the  state 
should  sell  to  the  stockholders ;  see  also  letter  from  the  stockholders  in  Democrat, 
February  8,  1868,  in  which  the  outlook  for  the  stockholders  is  regarded  as  very  gloomy. 

'i  Senate  Journal,  Adjourned  Session,  1S6S,  p.  34  and  House  Journal,  Adjourned 
Session,  /868,  p.  44. 

*  House  ajid  Senate  Journals,  Adjourned  Session,  /S6S,  Appendix,  pp.  21 1 -251. 


176  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

the  Valle  Bill  of  the  regular  session  of  1867.'  The  total  debt 
against  the  company  was  now  ^14,383,493.'^  To  pay  interest 
upon  such  a  debt  the  company  had,  according  to  the  report  of 
the  committee,  net  earnings  in  1866  to  the  amount  of  $698,826, 
and  in  1867  to  the  amount  of  $850, 789.2  Of  the  debt  only  a 
small  part  bore  7  per  cent,  interest ;  the  remainder  bore  only  6 
per  cent.  Reckoned  at  this  latter  rate,  the  net  earnings 
($850,789)  for  1867  would  have  paid  interest  on  $14,179,816, 
or  on  almost  the  entire  debt. 

Even  if  there  were  no  further  evidence  of  the  capacity  of 
the  Pacific  Railroad  Company  to  meet  all  of  its  obligations, 
what  is  given  above  would  be  enough  to  prove  it,  when  taken 
in  connection  with  the  fact  that  the  business  of  this  railway 
now  connecting  the  second  greatest  commercial  center  in  the 
Mississippi  Valley  with  a  fast  developing  center  on  the  western 
boundary  of  the  state  was  rapidly  growing.  The  business  of  the 
Pacific  Railway  had  steadily  grown  from  the  very  beginning, 
and  of  recent  years,  after  completion  to  Kansas  City  in  Septem- 
ber 1865,  it   had   made  gigantic   strides.^     There  was,    however, 

'  See  above,  p.   171- 

^  (i)  Debt  due  the  state: 

For  principal  of  bonds  loaned  to  the  company             -     $  7,000,000 
For  interest  from  July  i,  1859,  to  January  i,  1868    -  3,780,000 

For  tax  under  ordinance  of  April  8,  1865,  for  1867        -  253,644.50 

(2)  Debt  due  other  parties 3,349,848.60 

;?i4,383,493.io 
— See  House  and  Senate  Journals,  Adjourned  Session,  1S68,  Appendix,  p.  220. 
^Ibid.,  p.  215. 
♦Gross  earnings  of  Pacific  Railroad: 

For  year  ending  December  31,  1852  -         -         -         -     $  108 

"     1853     -         -         -         -  41.323 

"  "         February  28,  1855  .         .         .         .  97,176 

1856  -         -         -         -  330,222 

1857  -         -         -         -  426,285 

1858  -         -         -         -  668,346 

1859  -         -         -         -  674,248 
i860     -         -         -         -  648,600 

1861  ...         -  683,644 

1862  -         -         -         -  457,183 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  1 77 

one  item  of  expense  which  this  company  must  incur  ;  the  gauge 
of  the  road  must  be  changed.  The  investigating  committee 
estimated,  however,  by  comparing  the  work  to  be  done  here 
with  that  already  done  on  the  North  Missouri  Railroad,  that  this 
change  could  be  made  for  $390,000. 

That  the  company  had  great  faith  in  the  future  of  its  enter- 
prise is  seen  in  the  fact  that  in  addition  to  the  amount  spent  in 
repairs  of  roadbed  and  rolling  stock,  it  spent  the  sum  of 
$1,476,469  in  the  construction  of  rolling  stock  and  in  making 
such  other  additions  to  the  road  as  generally  come  under  the 
head  of  "  construction."  Of  this  sum  the  company  had  to  raise  a 
large  part  by  loans  which  appear  in  the  accounts  published  in  the 
report  of  the  committee  as  "bills  payable."'  In  concluding 
its  report  the  investigating  committee  referred  to  above  says  : 
"Making  a  liberal  allowance  for  change  of  gauge  and  other 
expenses  to  place  the  road  in  good  condition,  your  committee  is 
of  the  opinion  that  eight  million  dollars  is  the  minimum  sum  for 
which  the  state  ought  to  dispose  of  its  interest  in  the  Pacific 
Railroad."  => 

There  is,  however,  yet  further  unimpeachable  evidence  con- 
cerning the  earning  capacity  and  the  value  of  the  Pacific  Railway. 
The  earning  capacity  of  the  railway  may  be  gleaned  from  a 
reports  to  the  stockholders  April  10,  1867,  by  a  committee 
appointed  by  them   for  the   purpose  of   ascertaining  what  that 

P'or  year  ending  February  28,  1863         ....  679,956 

"     1864  -         -         -         -  906,745 

"               "          "     1865         ...         -  1,007,763 

"     1866  -         -         -         -  1,794,356 

"             •'        December  i,     1866         ...         -  2,615,915 

"             "               "           "     1867  -         -         -         -  2,807,992 

See  Senate  Journal,  1867,  Appendix,  p.  879  and  House  and  Senate  Journals, 
Adjourned  Session,  i8b8.  Appendix,  p.  215. 

^  House  ajid  Senate  Journals,  Adjourned  Session,  1868,  Appendix,  pp.  228  and  229. 

^  Ibid.,  p.  224. 

3  The  following  is  an  abstract  of  the  report :  The  committee  find  that  the  money 
due  and  to  become  due  during  the  year  1867,  over  and  above  the  expenses  of 
operating  the  road  and  interest,  consists  according  to  the  report  of  the  directory  of 

(i)  The  floating  debt -         -         -     $1,230,239 


178  STATE    Air3    TO    RAILWAYS    IN    MISSOURI 

capacity  was.  This  report  estimated  that  because  of  the  increas- 
ing productions  of  the  country,  there  would  be  an  annual  increase 
of  10  per  cent,  in  the  gross  earnings  of  the  road  for  the  next  few 
years.  Furthermore,  the  committee  thought  that  expenses 
would  not  increase  in  the  same  proportion.  Therefore,  setting  off 
the  necessary  increase  in  the  number  of  brakemen  and  laborers 
against  an  almost  certain  decline  in  wages  from  the  present  high 
standard  the  committee  estimated  that  the  operating  expenses 
for  the  next  few  years  would  remain  practically  unchanged. 
This  being  the  case  the  earnings  of  the  railway  in  the  next  three 
years  would  pay  "  the  present  floating  debt,"  put  new  rails  on 
the  road  where  needed,  "  pay  off  the  bonds  maturing  in  those 
years  and  leave  a  surplus  of  $870,358,"  which  "would  pay  all 
interest  [excepting  that  due  the  state,  of  course]  and  leave  a 
surplus  of  about  a  quarter  of  a  million  of  dollars  applicable 
towards  changing  the  gauge  of  the  road  between  St.  Louis  and 
Kansas  City."     The  committee  then  states  that  the  estimates  of 

(2)  The   amount  necessary  to  relay  track  between   Labadie  and 

Jefferson  City 245,000 


Making -         -         -         -         -         -  ^1,475,239 

In  1868  bonds  falling  due       -------  ;g5oo,ooo 

"  1869       u          u         u              .-..---  500,000 

"   1870      "          '•         "          -------  500,000 


Total       ---------         $2,975,239 

In  view  of  the  fact  that  the  gross  earnings  of  the  road  the  first  year  after  the 
suppression  of  the  Rebellion,  when  the  lands  were  comparatively  uncultivated, 
amounted  to  $2,669,586  we  think  the  increase  and  increasing  productions  of  the 
country  fully  authorize  us  to  estimate  our  annual  increase  of  10  per  cent,  in  the  gross 
earnings  of  the  road  for  the  next  few  years.  If  this  is  true,  and  we  think  the  future  will 
prove  it  to  be  an  underestimate,  the  gross  receipts  for 

Fiscal  year  1867  will  be  ------     $2,936,545 

"      1868        " 3,230,200 

"     1869 -         -         -       3,553.221 


Making  gross  receipts  for  three  years  -  -  -  $9,719,966 

We  understand  this  increased  business  can  be  done  by  the  road  without  any  other 
additional  operating  expenses  than  the  cost  a  few  brakemen  and  laborers,  if  the  present 
rate  of  wages  continue  ;  but  as  it  is  probable,  rates  will  decline  from  the  present  high 
standard,  we  think  the  operating  expenses  of  the  road  for  the  next  three  years  will  not 
average  more    than   the    last,  which  was   $1,958,123,  and  making  for  the  three  years. 


b 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  I  79 

the  engineer  and  superintendent  of  the  road  for  the  next  three 
years  exceeds  the  one  it  has  made. 

Again,  as  to  the  value  of  the  railway  President  Taylor  of  the 
company  stated  as  early  as  March  1867,  in  a  report  filed  in  the 
Auditor's  office  as  required  by  law  within  two  years  after  the 
completion  of  the  road,  that  the  value  of  the  road  was  "  7.4 
million  dollars  and  that  it  was  completed  to  the  state  line  April 
6,  1 866."  '  It  might  also  be  added  here  that  at  this  time,  just 
after  the  close  of  the  regular  session  of  1867,  the  president, 
in  answer  to  the  assertions  of  certain  individuals  that  the  Pacific 
Railroad  was  in  an  unsafe  condition,  states  that  the  condition  of 
the   road   although   many   repairs    are   needed   is  not  "unsafe."  ^ 

$5,874,369,  showing  a  net  profit  of  $3,845,397.  On  the  business  of  the  three  years 
which  will  pay  the  present  floating  debt,  re-iron  the  road  now  requiring  it,  pay  off  the 
bonds  maturing  in  three  years,  and  leave  a  surplus  of  $870,358,  which  will  pay  all 
interest  and  leave  a  surplus  of  about  a  quarter  of  a  million  of  dollars  applicable  towards 
the  changing  of  the  gauge  of  the  road  between  St.  Louis  and  Kansas  City  if  the 
interest  of  the  road  shall  then  require  the  change.  Since  writing  the  foregoing  we 
have  obtained  from  Mr.  McKissock  the  engineer  and  superintendent  of  the  road  his 
estimate  of  the  gross  earnings  of  the  road  for  the  next  three  years.  The  total  as  given 
by  the  committee  for  the  engineer  was  $10,531,519.  The  engineer  also  estimated  the 
expenses  lower  than  those  of  the  preceding  year  on  an  average.  The  report  con- 
tinues, "we  think  Mr.  McKissock's  estimate  is  entitled  to  more  credit  than  our  own 
(our  desire  being  to  be  certainly  inside  the  truth)  and  if  so  there  will  be  a  clear  profit 
in  the  next  three  years  of  $4,637,150  over  operating  expenses. 

"Mr.  McKissock  assures  us  also  that  when  the  track  between  Labadie  and  Jef- 
ferson City  is  relaid,  the  road  will  be  in  as  good  condition  as  any  road  in  the  country. 

[Signed]  Robert  S.  Barnes, 

D.  H.  Armstrong, 

J.  T.    SWEARINGEN, 

M.  J.  Payne, 

F.   W.  CORNENBALD." 

—  Missouri  Republican,  April  14,  1S67. 

'  Correspondence  from  Jefferson  City,  Democrat,  St.  Louis,  March  5,  1867. 

=  "  Now  that  the  legislature  has  adjourned  and  that  the  Pacific  Railroad  is  not  to 
be  sold,  allow  me  to  counteract  one  representation  of  '  lobbyists.'  Our  road  between 
Labadie  and  Jefferson  City  undoubtedly  needs  repairs,  and  these  are  being  continually 
made,  but  as  for  the  road  being  unsafe,  I  deny  {sic).    F  " 

From  an  editorial  copied  from  the  Kansas  State  Journal  of  March  10,  1867, 
President  Taylor  shows  that  this  "  is  an  excellent  road,"  and  is  highly  complimented 
in  its  management  and  the  like. — Democrat,  March  15,  1867.  See  also  President 
Tavlor's  "card"  on  the  condition  of  the  road  in  Republican,  March  15, 1867. 


l80  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

And  further,  as  might  indeed  have  been  expected,  there  was 
early  in  1868  some  opposition  to  the  sale  of  the  Pacific 
Railroad,  and  the  parties  gave  as  their  reason  that  the  road 
would  necessarily  increase  in  value  as  time  went  on.'  The  same 
sentiment  is  also  voiced  in  an  editorial  in  the  Democrat  of  March 
3,  1868  ;  the  editor  estimates  the  value  of  the  Pacific  Railroad  to 
be  'J. 'J  million  dollars  and  says  :  "  Seven  millions  is  not  what  the 
railroad  is  worth,  but  on  account  of  certain  embarrassments  the 
state  should  sell  at  so  much  if  it  desires  to  sell  at  all  at  this 
session." 

However,  as  has  been  said,  the  disposition  of  this  railway  at 
this  session  was  almost  a  foregone  conclusion.  Early  in  the  ses- 
sion the  House  and  Senate  passed  concurrent  resolutions  for  the 
seizure  and  sale  of  the  Pacific  Railroad;^  preliminary  acts  were 
introduced  in  the  House  in  January  and  in  the  Senate  early  in 
February  for  disposing  of  the  road;  and  the  House  Bill  (No. 
214)  which  eventually  became  a  law  was  introduced  February  3.3 

'  See  communication  by  "S,"  Democrat,  Marcli  5,  1868.  Among  other  things  the 
writer  says  we  can  get  at  what  the  state  should  do  by  asking  what  a  sensible  business 
man  would  do  in  the  premises.  Such  a  man  would  find  out  first  the  value  of  the 
property;  and  in  finding  its  value  he  would  hardly  go  to  his  debtor  and  listen  to  a 
long  harangue  as  to  the  unprofitableness  of  the  property,  the  cost  of  keeping  it  in 
repair,  the  many  legal  obstacles  in  the  way  of  enforcing  his  lien,  which  invariably 
ended  in  an  offer  to  take  it  off  his  hands  at  one-third  its  cost.  The  correspondent 
further  says  that  the  creditors  were  not  pressing  a  sale,  but  that  the  parties  who 
wanted  a  sale  were  the  debtors.  And  again  there  is  no  pressing  necessity  for  a  sale. 
Any  one  who  has  any  faith  in  the  future  growth  and  prosperity  of  Missouri  cannot 
fail  to  see  that  this  road  will  rapidly  increase  in  value  with  every  suceeding  year  for 
many  years  to  come. 

-See  below,  note  3. 

^  I.  Resolutions. 

January  17,  1S68. — Concurrent  resolution  in  the  Senate  for  the  sale  of  the  Pacific 
Railroad  ;  referred  to  Committee  on  Internal  Improvements  and  fifty  copies  ordered 
to  be  printed. 

f'ebruary  4,  '68. — Concurrent  resolution  in  House  for  the  seizure  and  sale  of  the 
Pacific  Railroad.  Read  first,  second,  and  third  time  and  referred  to  the  Committee 
on  the  Judiciary. 

II.  Preliminary  Bills. 

January  24,  '68. — Bill  introduced  in  the  House  for  the  sale  of  the  Pacific  Railroad. 

January  30,  '68. — New  bill  introduced. 


COXCLUSION  OF  THE  EXPERIMENT  OF  STATE  AID      l8l 

The  House   Bill  was  introduced  and  championed   by   Mr.  Fink- 
elnburg,  the  chairman  of  the  committee  appointed  to  investigate 

February  3,  '68. — Bill  No.  325  to  dispose  of  the  Pacific  Railroad  introduced  in 
the  Senate,  read  the  first  and  second  time,  referred  to  the  Committee  on  Internal 
Improvements  and  200  copies  ordered  to  be  printed. 

February  25,  '68. — New  bill  introduced. 

March  11,  '68. — Other  bills,  Nos.  346  and  355  mentioned. 

See  Senate  Journal,  p.  392. 

III.  Course  of  House  Bill  No.  214  which  became  law. 

February  3,  '68. — Introduced  in  the  House  by  Mr.  Finkelnburg,  chairman  of  the 
committee  appointed  to  investigate  the  books  and  accounts  of  the  Pacific  Railroad 
Company ;  bill  read  a  first  and  second  time,  referred  to  a  select  committee  on  the 
Pacific  Railroad  and  200  copies  ordered  to  be  printed. 

February  20,  '68. — (Morning  session).  Bill  reported  back  by  majority  of  special 
committee,  recommending,  among  other  amendments,  an  amendment  to  section  5  that 
the  price  of  six  million  dollars  be  asked  for  the  road. 

February  20,  '68. — (Afternoon  session).  Report  by  minority  of  the  special  com- 
mittee recommending  sale  for  five  million  dollars  to  the  present  company. 

February  21,  '68. — (Morning  session).  Substitute  bill  submitted  by  Mr.  Leder- 
gerber;  tabled  by  vote  of  65  to  50. 

February  21,  '68. — (Afternoon  session).  Donophan's  amendment :  Price  to 
remain  at  six  million  dollars,  but  four  millions  to  be  paid  down  and  two  millions  to  be 
paid  in  annual  installments  of  $100,000  each. 

February  25,  '68. — Donophan's  amendment  tabled.  Owens' amendment :  Portion 
of  purchase  money  to  be  paid  down   to   be   changed  from   ^350,000  to  $1,350,000. 

February  26,  '68. — (Morning  session).  Owens  presents  the  following  resolution  : 
"that  the  interest  of  the  state  demands  that  this  General  Assembly  should  pass,  at  as 
early  a  day  as  possible,  an  act  providing  for  the  sale  of  the  Pacific  Railroad,  and  that 
the  minimum  price  should  not  be  less  than  eight  millions  of  dollars,  and  that  the  pur- 
chaser or  purchasers  should  be  bound  to  change  the  gauge  of  the  road  to  the  same 
gauge  as  that  of  the  eastern  division  of  the  Union  Pacific  within  two  years  from  the 
day  of  purchase,  and  that  they  shall  be  bound  to  pay  the  Dresden  mortgage  bonds  and 
also  $700,000  loaned   by  St.   Louis  County;"  resolution   tabled   by  a  vote  of  54  to  51. 

February  26,  '68. — (Morning  session).  Owens'  amendment  called  up  but  passed 
over;  (afternoon  session)  amendment  lost  by  a  vote  of  62  to  51. 

February  27,  '68. — Amendments. 

February  28,  '68. — A  further  amendment  voted  down. 

March  3,  '68. — Further  amendments.  Amendment  offered  in  form  of  a  substitute 
bill. 

March  4,  '68. — Further  amendments  voted  down. 

March  5,  '68. — Substitute  bill  lost  by  a  vote  of  76  to  24. 

March  5,  '68.  — Bill  passed  by  a  vote  of  74  to  26. 

Ayes. — Messrs.  Akard,  Alexander,  Applegate,  Baldwin,  Beal,  Bennett,  Blodgett, 
Bogy,  Branscomb,  Britton,  Brock,  Brown  of  Dallas,  Brown  of  Daviess,  Bulkley,  Burch 
of  Jasper,  Buzick,  Childress,  Cole,  Coleman,  Cosgrove,  Dallmeyer,  Downey,  Doniphan 


l82  STATE    AID    TO    RAILWAYS    IN    MISS'OURI 

the  books  and  accounts  of  the  Pacific  Railroad  and  whose  report 

we  have  considered,  on  the  same  day  and   immediately  after  the 

Eagle,  Ellison,  Estep,  Ewing,  Ferreli,  Finkelnburg,  Fletcher,  P^ourt,  Fox,  Goodson, 
Griffin,  Haekleman,  Harper,  Hewitt,  Hickman,  Hoffmeister,  Hornbeak,  Hoskinson, 
Howard,  Jaquith,  Jerome,  Jewett,  Kelley,  Key,  Kidwell,  Kuhl,  Laughlin,  Lawson, 
Long,  McElhinney,  McFarland,  McGinnis,  Mullings  of  Grene,  Orrick,  Pond,  Proffer, 
Pyle,  Quinn,  Requa,  Rice,  Riggs,  Robertson,  Rollins,  Rountree,  Schulmburg,  Scott, 
Shafer,  Smelser,  Smythe,  Stafford,  Thompson,  Van  Wagoner,  Wade,  Walker,  Waters, 
Weinrich,  Whittaker,  Wilkinson,  Wolbrecht,  Wyatt,  and   Mr.  Speaker  (Harlan). — 84. 

Noes. — Messrs.  Betz,  Birch  of  Scotland,  Boon,  Cannon,  Cartmel,  Drum,  Hathaway, 
Howe,  Jones,  Learning,  Ledergerber,  Legg,  Linder,  Mitchell,  Monks,  Mullins  of  Linn, 
Neville,  Owens,  Payne,  Rinker,  Ryland,  Schneider,  Steele,  Taylor,  White  of  Cole,  and 
Zevely. — 26. 

Absent  on  leave. — Messrs.  Caldwell,  Cockerill,  Deland,  Drummond,  Eppstein, 
Eubanks,  Forgey,  Freeman,  Howell,  Lyman,  McMillen,   Ritchie,  Smith,  Woods. — 14. 

Absent. — Messrs.  McBride  and  Stanton. — 2. 

Sick. — Messrs.  Alley,  Ellis,  Farrar,  Jennings,  Silman,  Valle,  and  White  of  Ran- 
dolph.— 7. 

March  5,  '68. — Mr.  Owens  moved  the  following  amendment  to  the  title  of  the  bill  : 
"An  act  to  sell  the  Pacific  Railroad  and  to  give  away  two  millions  of  dollars  to  the 
present  company  "  [House Journal,  Adjourned Sessioti,  /868,  p.  481);  amendment  tabled. 

March  9,  '68. — Bill  sent  to  the  Senate,  taken  up  by  Senate,  read  a  first  and  second 
time,  amended,  referred  to  the  Committee  on  Ways  and  Means,  and  fifty  copies  ordered 
to  be  printed. 

March  18,  '68. — Reported  back  to  the  Senate  with  amendments  and  its  passage 
unanimously  recommended. 

March  19,  '68. — Discussed  and  amended. 

March  20,  '68. — Amendment  by  the  Senate  to  change  four  million  dollars  to  six 
million  dollars,  lost  by  vote  of  20  to  10.  Amendment  to  change  "four  millions  in  all  " 
to  "four  millions  five  hundred  thousand  in  all"  (that  is,  ^500, 000  more  for  the  road) 
carried ;  further  amended  ;  read  third  time  and  passed  by  a  vote  of  21  to  7. 

Ayes. — Boardman,  Bonham,  Clark,  Deal,  Ellis,  Evans,  Essex,  Fisher,  Graham, 
Headlee,  Human,  King,  Morse,  Park,  Rea,  Reed,  Ridgley,  Spaunhorst,  Tovvnsley, 
Winters,  and  Woerner. — 21. 

Noes. — Adams,  Bruere,  Conrad,  Dodson,  Goebel,  Hubbard,  and  Shelton. —  7. 

Absent  on  leave.  — Elweli,  Harbine,  and  Holland. — 3. 

Absent. — Cavender  and  Williams. — 2. 

Excused  from  voting. — Filler. —  i . 

March  20,  '68. — Bill  returned  to  the  House  and  concurrence  in  amendments 
requested. 

March  24,  '68. — Senate  amendments  discussed  in  House  but  not  all  agreed  to. 
Committee  appointed  to  confer  with  a  like  committee  of  the  Senate  concerning  amend- 
ments not  agreed  upon.     Conference  committee  appointed  by  the  Senate. 

March  25,  '68. — Senate  and  House  came  to  an  agreement. 

March  31,  '68. — Bill  signed  by  governor. 

For  bill  see  Laws  of  Missouri,  Adjourned  Session,  1868,  p.  114. 


CONCLUSION  OF  THE  EXPERIMENT  OF  STATE  AID       1 83 

report  of  his  committee,  was  laid  before  the  House.'  Exactly 
how  much  was  asked  for  the  railway  in  the  original  draft  of  the  bill 
does  not  appear.  However,  it  developed  in  a  short  time  that  in  the 
opinion  of  the  House  the  Pacific  Railroad  was  worth  about  six 
million  dollars.  In  the  Senate  the  estimates  hovered  around 
four  million  or  4.5  million  dollars.  The  discussion  dragged  on 
for  weeks  and  the  railway  company  sent  its  ablest  lobbyists  to  the 
legislature.^  In  a  short  time  it  was  discovered  that  there  were  cer- 
tain legal  obstacles  in  the  way  of  any  act  of  seizure  on  the  part  of 
the  state  at  this  time.  These  obstacles  formed  the  burden  of  the 
report  of  Mr.  Scott,  the  minority  portion  of  the  select  committee 
of  the  House  to  which  was  referred  the  bill  (No.  214)  for  dis- 
posing of  the  railway.  Mr.  Scott's  argument  was  that  under 
act  of  February  10,  granting  the  company  the  privilege  to 
issue  first-mortgage  bonds  on  the  road  west  of  Dresden  to  the 
amount  of  1.5  million  dollars,  known  as  Dresden  bonds,  the  state 
had  given  the  company  the  privilege  to  devote  all  the  earnings 
of  the  road  to  the  extension  of  that  part  of  the  road,  and  to 
paying  off  the  first-mortgage  bonds  till  they  were  all  canceled. 
The  last  of  these  bonds  would  not  fall  due  till  1871.  Therefore 
it  was  argued  that  the  state  could  not  gain  access  to  the  income 
of  the  road  till  the  Dresden  bonds  were  paid  off,  even  if  she 
should  foreclose  her  lien  on  the  portion  of  the  road  east  of  Dres- 
den. The  minority  portion  of  the  committee  was  "  not  willing  to 
see  the  road  fall  into  the  hands  of  strangers  for  a  less  amount 
than  that  fixed  by  the  committee  —  $8,350,000,"  but  favored 
the  sale  of  the  road  on  the  best  terms  possible  to  "the 
present  company." ^  The  friends  of  the  road  obtained  the  opin- 
ion of  legal  men  of  high  standing  to  prove  that  the  state  could 
not  take  control  of  the  railway  or  make  a  deed  to  it  to  other 
persons  than  the  present  company  before  1871.'' 

^  House  Journal,  Adjourned  Session,  j86S,  p.  225. 

*  See  Appendix  ii. 

^  House  Journal,  Adjourned  Session,  1S6S,  pp.  ^69-370. 

■♦ "  The  friends  of  the  road  had  fortified  themselves  with  legal  opinions  from  Knox 
and  Smith,  Senator  Drake,  S.  T.  Glover,  C.  C.  Whittelsey,  W.  B.  Napton,  and 
others,  to  the  effect  that  the  legislature  cannot  dispossess  the  company  from  the  road 


I  84  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

Notwithstanding  these  facts,  and  there  is  no  doubt  as  to  the 
conditions  of  the  act  of  February  10,  1864,  the  state  had  the 
right,  which  no  one  questioned,  to  continue  in  possession  of  the 
lien  on  the  road.  And  here  again,  as  in  the  case  of  the  North 
Missouri  Railroad,  a  vigorous  and  determined  state  government, 
backed  up  by  the  capable  and  honorable  legislature,  might  have 
made  a  stand  for  the  public  against  the  representatives  of  the 
company  and  have  saved  millions  to  the  state  treasury.  How- 
ever, from  the  day  (February  3,  1868)  of  the  introduction  of  the 
House  bill  No.  214,  the  feeling  that  the  lien  must  be  released 
grew  apace.  We  have  seen  that  the  value  of  the  road  was  put 
at  some  six  million  dollars  by  the  House  and  four  million  dollars 
by  the  Senate.  That  both  House  and  Senate  should  have  put 
the  estimate  so  low  after  the  joint  committee,  as  we  have  seen, 
had  said  in  its  report  that  $8,350,000  was  the  "minimum  sum 
for  which  the  state  ought  to  dispose  of  its  interests  in  the  Pacific 
Railroad,"'  cannot  be  explained  in  any  way  except  by  the  fact 
that  the  legislature  was  under  the  influence  of  King  Boodle,  who 
was  present  at  Jefferson  City  at' this  time  in  the  form  of  a  special 
committee  sent  thither  by  the  directors  of  the  Pacific  Railroad.' 
The  bill  disposing  of  this  road,  introduced  February  3,  1868, 
became  a  law  March  31.  While  making  a  provision  that  the 
road,  if  sold  according  to  the  act  of  February  22,  185  i  (the  act 
granting  the  first  aid  to  the  Pacific  and  Hannibal  and  St.  Joseph 
railroads),  should  not  be  sold  for  less  than  $8,350,000,  the  act 
provided  for  the  sale  of  the  road  directly  to  the  Pacific  Railroad 
Company  for  the  sum  of  five  million  dollars  in  cash  or  in  Mis- 
souri state  bonds,  on  condition  that  the  company  would  pay 
$350,000  into  the  treasury  within  ninety  days,  and  the  remainder 
within  ninety  days  thereafter.^  This  is  the  only  provision  of 
the  act  that  need  concern  us.     By  it  the  state  released  the  Pacific 

until  1870  under  the  Dresden  mortgage  act,  and  also  that  the  convention  act  "  of  1865 
was  a  clear  infraction  of  the  United  States  Constitution." — Democrat,  February  8, 1868  ; 
also  Republican,  February  15,  1868. 

'  See  above,  p.  183. 

-  For  names  of  committee,  see  Appendix  ii. 

'^  Laws  of  Missouri,  Adjourned  Session,  1868,  p.  114. 


CONCLUSION  OF  THE  EXPERIMENT  OF  STATE  "AID      1 85 

Railroad  Company  from   indebtedness   to   the   amount    of  $11,- 

033.644-' 

The  course  of  the  House  bill  No.  214,  already  given  at  length 

in  a  note,^  need  not  detain  us.  It  may,  however,  be  added  that 
the  printed  record  does  not  usually  throw  much  light  on  the 
modus  operandi  of  anxious  promoters  in  putting  such  a  bill 
through  a  legislature.  If  the  star-chamber  reports  of  the  pro- 
ceedings of  such  committees  as  that  sent  by  the  directors  of  the 
Pacific  Railroad  to  Jefferson  City  could  be  unearthed,  interesting 
and  valuable  information  of  the  manner  of  securing  the  passage 
of  such  bills  might  be  given  to  the  public  ;  as  it  happens,  in  this 
case  such  a  report  can  be  unearthed.  It  may  be  found  in  full  in 
Appendix  II.  In  this  report  the  special  committee  representing 
the  directors  of  the  Pacific  Railroad  state  that  the  first  important 
step  taken  by  them  was  to  secure  a  favorable  consideration  of 
their  "scheme  by  the  'St.  Louis  Press,'"  and  that  "after  many 
conferences,  much  delay  and  anxiety,  this  was  effected."  The 
"next  move"  of  the  committee  was  to  engage  or  "employ"  in 
their  interests  persons  of  such  "political  afifinities,  standing  and 
power,  with  the  dominant  party  in  the  legislature,  as  would 
soften  or  remove  the  Copperhead  character"  attributed  to  the 
Board  of  Directors  of  the  company,  so  that  they  could  "go 
before  the  party  endorsed  by  some  high  in  the  faith."  The 
committee  then  devoted  itself  to  the  work  of  preventing  the 
legislature  from  seizing  the  Pacific  Railroad  as  the  Iron  Moun- 
tain had  been  seized.  After  effecting  an  abatement  of  the 
"seizing  fever,"  the  next  effort  of  the  committee  was  to 
"impress  upon  the  minds  of  the  legislators  the  crippled  condi- 
tion of  the   company,   dilapidated   condition   of  the   road,"   and 

'The  statement  of  Hon.  Geo.  C.  Pratt  {Kansas  City  Review  of  Science  and  Indus- 
try, vol.  vi.,  p.  167)  to  the  effect  that  the  loss  sustained  by  the  state  in  consequence 
of  this  act  was  two  million  dollars  is  misleading.  The  principal  of  the  debt  was  seven 
million  dollars,  so  two  million  dollars  were  lost  on  the  principal.  By  the  act  of  March 
31,  1868,  the  Pacific  Railroad  Company  got  a  release  from  ^10,780,000  (not  including 
delinquent  taxes)  for  the  sum  of  five  million  dollars.  —  See  report  of  the  committee 
appointed  to  examine  the  books  and  accounts  of  the  Pacific  Railroad  Company,  in 
Appendix  to  House  and  Senate  Journals,  1868,  pp.  211-251. 

-See  above,  note  (3)  p.  180. 


1 86  *     STATE    AID    TO    RAILWAYS    IN    MISSOURI 

their  "inability  to  remedy  either."  This  they  were  able  to 
accomplish  "by  much  figuring,"  showing  "  enormous  amounts  of 
cash  demanded  for  instant  use."  The  progress  of  the  committee 
was  now  "very  slow,"  and  at  times  "terribly  discouraging,"  but 
"persevering  from  9  a.  m.  till  past  midnight  week  after  week, 
ably  assisted  by  numerous  parties  engaged  for  the  purpose,"  they 
at  last  succeeded,  but  not  without  adopting  the  "usual  mode,  as 
understood  and  practiced  by  many."  Concerning  method  the 
committee  concludes  ;  "  It  was  terribly  costly  for  an  ordinary  job, 
but  as  we  were  going  for  the  millions  and  every  one  off  counted 
well,  we  determined,  after  serious  consultation  with  discreet 
friends,  not  to  fail  ^ — leaving  the  morality  of  such  proceedings  to 
those  who  have  inaugurated  the  system  and  divided  its  gains." 
Again,  they  say  "The  bill  was  obtained  through  our  exertions 
and  appliances  at  a  cost  to  the  company  or  stockholders  of 
$57,313.60  already  paid  and  $134,865  to  be  paid,  the  whole 
aggregating  $193,648.60."  However,  with  a  pang  of  remorse 
the  committee  says  in  conclusion,  after  lamenting  the  large  "cost 
in  dollars,"  that  the  work  "cost  this  committee  an  amount  of 
anxious  labor,  pain,  mortification,  and,  we  may  safely  add, 
degradation,  that  they  will  never  again  willingly  undergo,  and 
which  this  or  any  other  company  can  never  adequately  compen- 
sate." The  special  friends  of  the  committee  in  the  legislature 
as  stated  in  the  report  were  Senators  George  H.  Rea,  Ridgley, 
Woerner,  and  Spaunhorst,  and  Representatives  Van  Wagoner, 
Branscomb,  Smythe,  and  Colman.'  No  further  proof  need  be 
sought  for  to  enable  us  to  answer  the  question  how  the  Pacific 
Railroad  bill  of  March  31,  1868,  was  passed  and  to  answer  finally 
whether  or  not  the  company  was  able  to  discharge  its  obligations 
to  the  state. 

The  passage  of  the  bill  releasing  the  lien  of  the  state  was 
secured  by  a  falsifying,  mercenary  committee  from  legislators 
the  majority  of  whom  were  as  venal  as  the  committee  was  mer- 
cenary. It  seems  that  for  a  given  price  the  legislators  were 
willing  at  the  behest  of  boodlers  to  mount  into  the   vehicle   of 

'  See  Appendix  ii. 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  18/ 

dishonor  and  be  driven  unheedingly  over  the  prostrate  but  now 
reviving  form  of  State  Credit.  Such  being  the  character  of  the 
trusted  representativ^es  of  the  people,  the  alternative  of  state 
control  of  the  railways  for  a  longer  or  a  shorter  time  in  prefer- 
ence to  disposing  of  them  for  even  a  pittance,  becomes  a  most 
questionable  one.  In  passing  judgment  upon  the  experiment  as 
a  whole  in  the  closing  chapter  of  this  study,  this  point  will  be 
given  its  proper  consideration. 

§  II.  The  railways  were  now  disposed  of.  The  purposes  in 
disposing  of  them  were,  as  has  been  seen  :  (i)  to  reduce  the  in- 
debtedness of  the  state,  and  (2)  to  secure  as  far  as  possible  the 
extension  of  the  railways  to  their  completion.  The  first  object, 
the  reduction  of  the  state  indebtedness,  was  effected  in  only  a 
slight  degree.  The  total  railway  indebtedness  of  the  state  January 
I,  1868,  was,  in  bonds  and  interest  due,  $31,735,840.'     Including 

'The  following  table  shows  the  principal  of  the  bonds  loaned  each  railroad 
company  and  the  interest  accumulated  thereon  up  to  date  of  sale  or  the  time  when  the 
state  released  the  liens  held  in  the  various  roads. 

To  the  Pacific  Railroad,  direct  sixes  -----     $7,000,000 
Interest  on  same  from  July  i,  1859  to  July    i,  1868,  about 
which  time  the  road  was  sold  to  the  P.  R.  R.  Co.  under  the 
act  of  March  31,  1868  -------       3,780,000 

Total  ---------  510,780,000 

To  the  South  West  Branch,  direct  si.xes      -         -         -         -     $2,589,000 

"  "  "  "     "guaranteed"  sevens        -     1,911,000 

Interest  on  same  from  January  i,  1861,  to  January  i,  1868, 
a  short  time  after  which  the  property  was  conveyed  to  A. 
C.  Kingsland  and  his  associates  under  act  of  March  17, 
1868       --.-.---.-     2,023,770 

Total  ----------  $6,523,770 

To  the  North  Missouri  Railroad,  direct  sixes  -  -  -  $4,350,000 

Interest  on  same  from  July  i,  1858,  to  July  i,  1868,  at  which 
time  Henry  T.  Blow  and  his  associates  purchased  the  road 
under   the  act  of  March  17,  1868   -----       2,610,000 

Total  ----------  $6,960,000 

To  the  St.  Louis  and  Iron  Mountain  Railroad,  direct  sixes  -     $3,501,000 
Interest  on  same  from  July  i,  1858,  to  January  1, 1868,  a  short 
time   after  which  the   title  to  the  road  was  confirmed  to 
Thomas  Allen  and  associates  under  act  of   March  17,  1868    1,995,570 

Total $5,496,570 


1 88  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

various  small  amounts  of  interest  paid  by  different  companies 
since  the  first  defaults,  even  before  any  act  was  passed  looking 
to  a  sale  of  the  railways  and  thereby  a  reduction  of  the  state 
indebtedness,  and  $25,000  recovered  in  1869  from  the  first  pur- 
chasers of  the  St.  Louis  and  Iron  Mountain  and  Cairo  and  Ful- 
ton railroads,  the  total  amount  realized  from  the  sale  of  the 
railroads  to  offset  the  indebtedness  of  $31,735,840  was  the  small 
sum  of  $6,131,496,^  leaving  the  state  to  bear  alone  the  burden  of 

To  the  Cairo  and  Fulton  Railroad,  direct  sixes         -         .         .  5650,000 
Interest  on  same   from  July  i,  1859,   to  January  i,  1868,  a 
short  time  after  which  the  title  to   the  road  was  confirmed 
toThomas  Allen  and  associates  under  act  of  March  17,  1868     331,000 

Total $981,500 

To  the  Platte  Country  (formerly  County)  Railroad,  direct  sixes  $700, 000 
Interest  on  same  from  January  i,  1861,  to  January  1868,  soon 
after  which  time   the  state   provisionally  released  her  lien 
under  act  of  March  17,  1868,  to  the  Missouri  Valley  Railroad 
Company,  the  successor  of  the  P.  C.  R.  R.  Co.    -         -         -    294,000 

Total 994,000 

Principal -       $23,701,000 

Interest 8,034,840 

Grand  Total $31,735,840 

— See  Auditor'' s  Report,  1S83-4,  part  2,  p.  100. 

'The  amounts  received  by  the  state  in  interest  payments  since  the  com- 
panies began  to  default  and  in  partial  payments  by  purchasers  of  the  various  roads 
from  the  beginning  of  the  attempts  to  effect  a  sale  till  the  roads  were  finally  disposed 
of,  including  $25,000  recovered  for  the  state  from  the  purchasers  of  the  St.  Louis  and 
Iron  Mountain  and  Cairo  and   Fulton  railroads  (November  8,  1866),  were  as  follows  : 

Platte  Country  Ixailroad. 

June  28,  1865.  Interest  paid  by  James  N.  Burns   for  the  Atchi- 

son and   St.   Joseph  and   Weston  and  Atchison 
R.  R.  companies  underact  of   February  18,  1865  $26,670 

August  16,  1866.  First  installment  due  January  i,  1866,  under  act 
of  P'ebriiary  18,  1865,  from  sale  of  P.  C.  R.  R., 
paid  by  J.  Condit  Smith,  President  of  Weston 
and   Atchison  and  St.  Joseph  R.  R.  companies  100,000 

August  t6,  1866.  Interest  paid  by  J.  Condit  Smith  on  purchase 
price  of  P.  C.  R.  R.  under  act  of  February  18, 
1865 26,350 

January  4,  1867.       Interest  on   same   due  January  i,  1867,  paid  by 

J.  Condit  Smith  ------      9,520 

161,540 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  1 89 

$25,604,344.  The  second  object,  the  extension  of  the  railways, 
it  may  be  said  was  accomplished  ;  the  companies  complied  with 
the  several  acts  releasing  the  liens  by  extending  their  lines.  By 
this  compliance  there  was   secured    to    the   state   the  amount  of 

July  I,  1867.  Interest  on    same   due  July    i,    1867,   and    Jan-  j55l6l,540 

uary  i,  1868,  paid  by  J.  Condit  Smith,  President 
of  the  Missouri  Valley  R.  R.  Co.         -  .  -  23,120 

December 3 1, 1867.  Interest  on  same  due  January  i,  1868,  paid  by 
John  G.  Richardson,  President  of  the  M.  V.  R. 
R.  Co.        - 23,040 

July  I,  1868.  Interest  on  same  due  July  i,  1868,  paid  by  M.  V. 

R.  R.  Co.  -         - -       6,180 

Total         -         - $214,880 

St.  Louis  and  Iron  Mountain  and  Cairo  and  Fulton  Railroads. 
September  i,  1863.  Interest  paid  by  S.  D.  Barlow,  President  of  St. 

L.  and  I.  M.  R.  R.  Co.     -         -         -         -         -  $38,000 

September  16,  1863.  Ditto  -.---..  1,200 

October  27,  1863.      Ditto      --------     20,000 

January  7,  1866.         First  installment  of  purchase  price  paid  by  John 
C.  Vogel,  Saifluel  Simmons,  A.    J.  Mackay  and 
Joseph  C.  Read       ------  225,700 

January  11,  1868.       Interest  on  deferred  payment  paid  by  Thomas 

Allen        -  - -     40,458 

January  15,  1869.       Ditto 40,458 

July  I,  1869.  Amount  paid  by  A.  J.  Mackay,  J.  C.  Vogel,  on 

account  of  judgment  in  favor  of  state  in  circuit 
court  of  St.  Louis    ------       25,000 

Total       ----------  $391,616 

Pacific  Railroad. 

June  19,  1868.  First  payment  of  purchase  price  under    act  of 

March  31,  1868,  by  P.  R.  R.  Co.        -         -         -  $350,000 
October  i,  1868.         Second  payment  by  P.  R.  R.  Co.  -         -         -       4,650,000 

^  Total -         -         -         .  $5,000,000 

South  West  Branch. 

June  14,1866.  Partof  first  installment  of  purchase  price,  paid  by 

R.  I.  Mcllhaney,  one  of  the  commissioners  who 
sold  the  road  to  General  Fremont  under  act  of 
February  19,  1866  ------  $319,650 

June  23,  1866.  Remainder    of    first    installment    paid  by  R.  I. 

Mcllhaney      -------         5,350 

Total       - .         -         .  $325,000 


I  go  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

626  miles  of  additional  railway.'  At  the  time  of  the  releasing 
of  the  state's  lien,  only  914  miles  of  railway  had  been  completed 
no  extension  practically  having  been  made  since  the  act  of 
February  19,  1866,  the  first  comprehensive  act  passed  for  the 
disposition  of  the  railways.  As  so  many  miles  were  added  in 
compliance  or  practically  in  compliance  with  the  several  acts 
releasing  the  liens  held  by  the  state,  these  acts  are  to  be  regarded, 
as  they  were  really,  as  acts  passed  to  aid  in  the  further  extension 
of  the  railways.  Taking  this  view  of  the  matter,  the  debt  of 
$25,604,344,  as  finally  left  upon  the  state,  must  be  regarded  as 
incurred  for  the  purpose  of  assisting  in  the  construction  of  not  only 
the  914  miles  of  railway  in  existence  at  the  time  of  the  passing  of 
the  acts,  but  of  the  i  540  miles  in  existence  after  the  companies  had 
completed  the  railways  in  compliance  with  the  acts  releasing  the 
various  liens.  Reckoned  upon  the  latter  number  of  miles,  the 
indebtedness  of  the  state  had  been  incurred  at  the  rate  of  $16,626 
per  mile.  The  probability  that  the  roads  would  have  been  extended 
without  the  release  of  the  state's  liens  will  be  taken  up  in  the 
closing  chapter. 

§  12.  As  one  might  expect  from  the  account  of  the  many 
railway  bills  as  given  in  the  preceding  pages,  certain  "  charges 
and  reports  concerning  bribery  and  corruption"  were  floating  about 

North  Missouri  Railroad. 

July  3,  1868.  Amount  paid  by  Gerard  B.  Allen,  John  J.  Roe,  Solon 
Humphreys  and  their  associates  for  the  North  Missouri 
R.  R.  as  provided  in  act  of  March  17,  1868         -         )i5200,ooo 


Total  .......  ;g2oo,ooo 


Grand  Total  ......  ;g6, 13 1,496 

— See  Auditor''s  Report,  1S83-4,  part  2,  pp.  98-99. 

On  the  North  Missouri  (main  line)  -  -  -     60 

"         "  (west  branch)  -  -  150 

St.  L.  and  I.  M.  R.  R        -  -  -  -     84 

Cairo  and    Fulton        ....  37.5 

South  West   Branch  ....  206 

Missouri  Valley  R.    R  -  -  -  88.5 


Total     -  -  -  -  -  -  626 

— See  map  on  opposite  page. 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  I9I 

during  the  month  of  March  1868  at  the  capital  of  Missouri,  and 
on  March  23,  a  few  days  following  the  disposal  of  the  St.  Louis 
and  Iron  Mountain,  Cairo  and  Fulton,  North  Missouri,  South 
West  Branch,  and  Platte  Country  railroads,  and  a  few  days  pre- 
ceding the  sale  of  the  Pacific  Railroad,  both  houses  appointed 
committees  to  investigate  these  charges  and  reports  concerning 
bribery  and  corruption.  Of  course  resolutions  had  to  be  passed 
bv  the  respective  houses  requiring  the  appointment  of  such 
committees.  The  resolution  in  the  Senate  carried  by  a  vote  of 
25  to  3.'  It  will  be  recalled  from  the  sketch  of  the  star-chamber 
report  of  the  Pacific  Railroad  committee  given  above,  which 
secured  the  passage  of  the  bill  releasing  the  state's  lien,  that 
the  committee  especially  remembered  Senators  Spaunhorst  and 
Woerner  for  their  valuable  help  in  passing  the  bill.  And  it 
is  interesting  to  note  that  of  the  three  negative  votes  on  the 
resolution  in  the  Senate  demanding  an  investigation  of  the 
rumors  of  frauds  and  corruption,  two  were  cast  by  Senators 
Spaunhorst  and  Woerner.  Senators  Ridgley  and  Rea,  also 
mentioned  by  the  committee  as  being  of  great  service,  voted, 
however,  in  the  affirmative.  The  committee  appointed  by  the 
Senate  was  Messrs.  Holland  and  Woerner.  In  the  House  the 
resolution  to  appoint  an  investigating  committee  carried  unani- 
mously—  Branscomb,  Colman,  Smythe,  and  Van  Wagoner, 
especially  remembered  by  the  Pacific  Railroad  committee,  all 
voting  in  the  affirmative.  The  members  of  the  House  com- 
mittee were  James  D.  Harper,  D.  T.  Jewett,  Albert  Griffin,  A. 
E.  Wyatt,  and  H.  J.  Drummond.^  This  joint  committee 
appointed  during  the  morning  session  of  March  23,  was  required 
bv  the  legislature  to  report  on  the  following  day,  as  if  the 
work  of  months  could  be  investigated  in  a  few  hours.  Although 
all  the  members  of  this  joint  committee  did  not  vote  in  the 
affirmative  on  all  bills  releasing  the  state's  lien,  and  are  there- 
fore not  all  to  be  summarily  classed  among  those  who  doubt- 
less traded  off  the  public   interests   for   private  gain,  the  inves- 

^  Senate  Journal,  Adjourned  Session,  rS6S,  p.  511. 
'House  Journal,  Adjourned  Session,  1S6S,  p.  730. 


CONCLUSION  OF  THE  EXPERIMENT  OF  STATE  AID      IQI 

during  the  month  of  March  1868  at  the  capital  of  Missouri,  and 
on  March  23,  a  few  days  following  the  disposal  of  the  St.  Louis 
and  Iron  Mountain,  Cairo  and  Fulton,  North  Missouri,  South 
West  Branch,  and  Platte  Country  railroads,  and  a  few  days  pre- 
ceding the  sale  of  the  Pacific  Railroad,  both  houses  appointed 
committees  to  investigate  these  charges  and  reports  concerning 
bribery  and  corruption.  Of  course  resolutions  had  to  be  passed 
bv  the  respective  houses  requiring  the  appointment  of  such 
committees.  The  resolution  in  the  Senate  carried  by  a  vote  of 
25  to  3.'  It  will  be  recalled  from  the  sketch  of  the  star-chamber 
report  of  the  Pacific  Railroad  committee  given  above,  which 
secured  the  passage  of  the  bill  releasing  the  state's  lien,  that 
the  committee  especially  remembered  Senators  Spaunhorst  and 
Woerner  for  their  valuable  help  in  passing  the  bill.  And  it 
is  interesting  to  note  that  of  the  three  negative  votes  on  the 
resolution  in  the  Senate  demanding  an  investigation  of  the 
rumors  of  frauds  and  corruption,  two  were  cast  by  Senators 
Spaunhorst  and  Woerner.  Senators  Ridgley  and  Rea,  also 
mentioned  by  the  committee  as  being  of  great  service,  voted, 
however,  in  the  affirmative.  The  committee  appointed  by  the 
Senate  was  Messrs.  Holland  and  Woerner.  In  the  House  the 
resolution  to  appoint  an  investigating  committee  carried  unani- 
mously—  Branscomb,  Colman,  Smythe,  and  Van  Wagoner, 
especially  remembered  by  the  Pacific  Railroad  committee,  all 
voting  in  the  affirmative.  The  members  of  the  House  com- 
mittee were  James  D.  Harper,  D.  T.  Jewett,  Albert  Griffin,  A. 
E.  Wyatt,  and  H.  J.  Drummond.""  This  joint  committee 
appointed  during  the  morning  session  of  March  23,  was  required 
by  the  legislature  to  report  on  the  following  day,  as  if  the 
work  of  months  could  be  investigated  in  a  few  hours.  Although 
all  the  members  of  this  joint  committee  did  not  vote  in  the 
affirmative  on  all  bills  releasing  the  state's  lien,  and  are  there- 
fore not  all  to  be  summarily  classed  among  those  who  doubt- 
less traded  off  the  public  interests  for  private  gain,  the  inves- 

^  Senate  Journal,  Adjourned  Session,  /S68,  p.  511. 
^ House  Journal,  Adjotirned  Session,  iSbS,  p.  730. 


192  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

tigation  by  the  committee  during  the  "afternoon"  and  "even- 
ing" of  March  23,  because  of  the  insuflficient  time  devoted  to 
the  matter,  cannot  be  regarded  as  anything  but  farcical.  And 
today  we  need  not  be  surprised  that  the  committee  were 
"unable  to  obtain  one  word  of  evidence"  that  any  member  of 
the  General  Assembly  had  "received  or  indicated  a  willingness 
to  receive,  directly  or  indirectly,  a  single  dollar,  or  any  valu- 
able consideration  as  an  inducement  to  support  or  oppose  any 
railroad  bill,"  or  that  any  person  had  "used  or  been  authorized 
to  use  any  money  to  secure  the  vote  of  any  Senator  or  member 
of  the  House,"'  when  it  is  known  that  one  of  the  leading  mem- 
bers of  the  committee,  Senator  Woerner,  was  at  that  time  render- 
ing "valuable  assistance"  to  the  Pacific  Railroad  committee.^ 

'  The  report,  which  was  the  same  verbatim  in  both  the  Senate  and  House,  is  as 
follows  : 

"Your  committee  appointed  yesterday  for  the  purpose  of  investigating  rumored 
frauds  or  corruptions  in  connection  with  the  railroad  bills  of  this  General  Assembly, 
after  having  devoted  the  whole  of  the  afternoon  and  until  a  late  hour  last  night  to 
the  investigation,  and  having  examined  all  the  witnesses  within  our  reach  from  whom 
there  was  any  reason  to  hope  or  grounds  to  believe  that  any  information  could  be  had, 
have  instructed  me  to  submit  the  following  report : 

"Your  committee  find  that  among  the  persons  attending  on  the  General  Assem- 
bly, ostensibly  in  the  interests  of  various  railroads,  there  is  a  class  of  irresponsible 
lobbyists  hanging  around,  with  no  apparent  object  except  to  make  money  by  any 
means  they  can  devise ;  and  prominent  among  these  men  is  one  S.  W.  Cox,  who  has 
indirectly,  but  not  doubtfully,  approached  members  of  this  General  Assembly  with  the 
view  of  influencing  their  votes  for  the  Pacific  Railroad  by  the  use  of  money.  Said 
Cox  states  that  he  made  these  offers  with  the  hope  of  making  money,  but  further 
states  that  he  had  no  definite  plan  in  his  mind  by  which  he  hoped  to  bring  money 
into  his  own  pocket  in  case  the  offered  bribes  had  been  accepted,  and  that  he  had  not 
the  slightest  assurance  that  the  railroad  company  or  any  member  thereof  would  fur- 
nish a  single  dollar  with  which  to  buy  votes. 

"  Your  committee  have  not  been  able  to  obtain  one  word  of  evidence  that  any 
member  of  this  General  Assembly  has  received  or  indicated  a  willingness  to  receive, 
directly  or  indirectly,  a  single  dollar,  or  any  valuable  consideration,  as  an  inducement 
to  support  or  oppose  any  railroad  bill,  nor  that  any  person  has  used  or  been  authorized 
to  use  any  money  to  secure  the  vote  of  any  Senator  or  member  of  the  House. 

"Your  committee  have  had  the  evidence  of  the  witnesses  brought  before  them 
taken  down  by  a  phonographic  reporter,  but  found  it  impossible  to  have  it  copied 
within  the  time  allowed  for  making  this  report."  See  Senate  and  House  Journal 
Adjourned  Session,  1868,  respectively,  pp.  526  and  755. 

^See  Appendix  ii. 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  1 93 

§  13.  As  the  railways  were  now  all  disposed  of,  it  is  pertinent 
to  ask  what  was,  in  broad  outline,  the  financial  condition  of  the 
state.  One  of  the  aims  of  releasing  the  various  liens  was,  as  we 
have  seen,  that  the  indebtedness  of  the  state  might  be  reduced  ; 
and  we  have  noted  that  the  indebtedness  due  to  railway  ven- 
tures had  been  reduced  thereby  from  $31,735,840  to  $25,604,- 
344.  The  whole  indebtedness  of  the  state  prior  to  the  releas- 
ing of  the  liens  was,  however,  much  more  than  $31,735,840. 
The  state,  during  the  war,  had  incurred  a  war  debt  of  $7,546,- 
575.'  Of  this,  however,  $3,016,657  had  been  redeemed  before 
the  close  of  the  war.^  Consequently  on  January  i,  1865,  the 
aggregate  debt  of  the  state  was   $36,094,908.2 

As  early  as  February  15,  1865,  the  legislature  passed  a 
resolution    to  the  effect   that  the   faith  of  the  state   should   be 

'  The  war  debt  October  30,  1865,  was  made  up  as  follows  : 

Defense  warrants  of  1861  and  1864         ....  ;5!i,476,575 

Loan  of  Governor  Gamble  of  1862               ....  150.000 

Interest  on  same  to  January  ],  1866         -          .          .          .  30,000 

Union  military  bonds  of  1863              .....  3,000,000 

Interest  on  same            -         -         -           ....  37,545 

Union  military  bonds  of  1865              .          -          .          .          .  2,000,000 

Interest  on  same  to  May  15,  1866          .          .          .          .  100,000 
Unpaid  claims  in  Quartermaster's  Department 
Unpaid  claims  in  Paymaster's  Department 
Interest  on  Union  military  bonds  of   1863,  outstanding    to 

May  1866,  estimated         .-..-..  252,455 

Total -  $7,546,575 

— See  Auditor's  Report,  1883-4,  P^rt  2,  p.  1 15. 

^Auditor's  Report,  1883-4,  part  2,  p.  115. 

3    The  old  state  debt         - $      622,000 

The  railroad  debt,  principal       ......  23,701,000 

The  railroad  debt,  interest  (revenue  bonds)             -         -  431,000 

Past  interest  due  upon  the  two          .....  5,923,320 

The  war  debt  of  1862  (reported) 150,000 

Interest  on  same              .......  21,000 

Defense  warrants,  outstanding             .....  292,099 

Union  military  bonds  of  1863,  outstanding     -         -         -  1,230,489 

Interest  on  same,  estimated        -..-..  123,000 

Unpaid  military  claims  (paid  in  1865  and  1867)      -         -  3,601,000 

Total         ........  $36,094,908 

—  S^e  Auditor's  Report,  1883-4,  part  2,  p.  116. 


500,000 


194  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

"preserved  with  all  her  creditors,  and  their  demands,  interest 
and  principal,  be  satisfied  to  the  fullest  requirements."'  But 
in  the  constitution  adopted  in  1875  a  provision  was  inserted 
which  prohibited  the  use  of  the  credit  of  the  state  to  assist 
any  private  or  corporate  enterprise  whatsoever.  The  com- 
mittee entrusted  with  the  matter  of  drawing  up  a  plan  in  1866 
for  funding  the  indebtedness  of  the  state  reported  February 
17,'  and  an  act  was  passed  on  the  sixth  of  March  follow- 
ing to  fund  the  debt  by  issuing  30  million  dollars  of  "Con- 
solidation Bonds"  to  be  dated  January  i,  1868,  running  thirty 
years,  with  coupons  attached  bearing  rates  of  interest  varying 
from  3  to  9  per  cent,  for  different  periods,  as  the  time 
advanced,  and  averaging  6  per  cent,  for  the  entire  period  of 
thirty  years.  The  surplus  of  the  separate  annual  payments  was  to 
form  a  sinking  fund  such  as  would  complete  the  extinguishment  of 
the  debt  at  the  end  of  the  period.''  On  March  12,  1867,  how- 
ever, an  act  was  passed  which  provided  for  the  issuing  of  "Con- 
solidated Bonds"  to  the  amount  of  only  the  accrued  interest 
remaining  unpaid  January  i,  1868;^  and  on  that  date  (January 
I,  1868)  the  amount  of  $3,868,000  of  "Consolidation  Bonds" 
were  issued  for  this  purpose.^  During  the  four  years  from  1865- 
1869  the  treasurer  was  enabled  to  reduce  the  debt  of  the  state  to 
the  amount  of  $14,419,908,  leaving  the  debt  on  January  i,  1869, 
$21,675,000.  The  funds  received  by  which  this  reduction  could 
be  made,  other  than  the  receipts  from  taxes,  bonuses  from  banks 
in  lieu  of  all  other  taxes,  and  the  funds  arising  from  the  with- 
holding of  25  per  cent,  of  the  state  revenues  from  the  public 
schools   for    1865,  1866   and    1867,   came   from   the    sale   of  the 

'  House  Journal,  Adjourned  Session,  iSb^-b,  p.  556. 

-Laws  of  Missotiri,  Adjourned  Session,  1863-b,  p.  194. 

'^Auditor's  Report,  1883-4,  part  2,  p.  121. 

*  From  the  sale  of  bank  stock         ....  -      $1,178,635.50 

From  the  sale  of  railroads  and  the  payment  of  interest  and  dues 

by  railroad  companies  ...  -  -  6,006,038.00 

From  collections  by  Gen.  J.  B.  Gray  from  the  United  States  -        4,863,924.90 


$12,048,598.40 
-See  Auditor's  Report,  1883-4,  part  2,  p.  117. 


CONCLUSION    OF    THE    EXPERIMENT    OF    STATE    AID  1 95 

stock  held  by  the  state  in  the  bank  of  Missouri,  the  sale  of  the 
railways,  and  the  reimbursement  of  the  state  by  the  United 
States  for  military  expenses  incurred  by  the  state  during  the  war/ 
The  rate  of  taxation  had  also  been  reduced  during  these 
years.  In  1865  there  was  a  revenue  tax  of  40  cents  and  a  mili- 
tary tax  of  20  cents  on  the  ^lOO  valuation  of  property  and  two 
poll  taxes,  one  of  $1.00  for  revenue  purposes,  and  one  of  $2.00 
for  military  purposes.  In  1869  and  1870  and  1871  there  were 
only  two  forms  of  taxes  for  state  purposes,  a  revenue  tax  of  25 
cents  and  an  interest  tax  of  25  cents  on  the  $100  valuation  of 
property.'  Thus  in  the  past  four  years  the  indebtedness  of  the 
state  had  been  reduced  from  ^36,094,908  to  ;g2i, 675,000,  and 
taxation  had  been  reduced  from  60  cents  on  the  ^lOO  valuation 
of  property  and  $3.00  poll  tax  to  50  cents  and  no  poll  tax.  In 
closing  his  report  December  31,  1868,  Auditor  Thompson  says: 
"The  revenues  of  the  state  have  been  gradually  assuming  order 
and  regularity  ;  the  arrears  of  taxes  have  been  levied  and  col- 
lected in  seventy-two  counties,  so  that  at  the  present  day,  with 
two  exceptions,  all  the  counties  of  the  state  levy  and  collect  the 
current  revenues.  The  state  can,  therefore,  with  good  assurance, 
estimate  the  revenues  which  are  to  come  into  the  treasury,  and 
the  expenditures  which  are  required  for  the  administration.  With 
economy  and  strictest  order  in  the  management  of  our  state 
finances,  we  may  well  feel  satisfied  that  the  future  before  us  is 
bright  with  the  hope  of  prosperity,  such  as  only  in  a  regenerated 
free  state  can  be  witnessed."^ 

^Auditor's  Report,  1883-4,  part  2,  p.  312. 

^  House  and  Senate  Journals,  i86g.  Appendix  p.  190. 


CHAPTER  VI. 

INTERNAL-IMPROVEMENT  EXPERIMENTS  IN  SOUTHERN 

STATES. 

§1.  The  facts  regarding  the  experiment  of  aiding  railways 
in  Missouri  have  been  given.  It  now  remains  to  take  a  glance 
at  similar  experiments  in  other  states  during  the  time  in  which 
Missouri  was  engaged  in  hers,  and  then  to  summarize  the  results 
of  our  study,  in  so  far  as  it  may  appear  that  results  have  been 
reached.  It  has  already  been  seen  that  many  states,  prior  to 
1850,  especially  between  1836-1S41,  in  the  matter  of  internal 
improvements,  ran  the  whole  gamut  from  the  high  notes  of  joy- 
ous expectation  to  the  lowest  notes  of  bitter  disappointment.  It 
is  also  true  that  some  of  the  states  never  succeeded  in  getting 
under  full  headway  in  the  matter  of  constructing  public  works  till 
after  1850.  After  the  failures  of  1 837-1 840  and  during  the  con- 
sequent depression  that  extended  through  a  large  part  of  the 
following  decade  very  little  was  done  in  aiding  railway  construc- 
tion by  any  of  the  states  in  the  Union.  The  Northern  States 
played  at  paternalism  no  further,  and  the  Southern  States  did 
not  recover  from  the  shock  of  the  crisis  of  1 837-1 839  sufficiently 
to  feel  able  to  undertake  industrial  enterprises  necessarily  involv- 
ing enormous  expenditures.  Not  a  few  of  the  Southern  States 
about  1850  began  to  feel  strong  enough  to  undertake  such 
experiments,  but  others  did  not  become  fully  engaged  in  railway 
construction  till  after  the  Civil  War.  The  experiments  of  the 
Southern  States  cannot  strictly  be  classified  as  ante  bellum  and 
post  bcllimi  experiments,  although  not  a  few  of  them  reached  a 
considerable  degree  of  development  before  the  war,  while  others 
were  not  begun  till  after  its  close.  Georgia,  Tennessee,  Virginia, 
South  Carolina  and  Louisiana  began  aiding  railway  construction 
and  internal  improvements  in  general   in  a  more  or  less  preten- 

196 


INTERNAL-IMPROVEMENT  EXPERIMENTS  I97 

tious  way  even  as  early  as  1837,  or  during  the  period  of  great 
state  activity  in  this  matter  in  the  North.  Kentucky  and  North 
Carolina  did  not  begin  so  early.  In  all  the  first-mentioned 
Southern  States  the  internal  improvements  already  inaugurated 
received  a  new  impetus  about  1850  through  the  returning  pros- 
perity of  the  times;  in  the  latter  states  (Kentucky  and  North 
Carolina),  as  in  Missouri,  the  aiding  policy  began  at  this  time 
and  developed  in  the  following  years.  The  remaining  states, 
which  engaged  at  all  in  aiding  railways,  Alabama,  Florida, 
Texas,  and  Arkansas,  did  practically  nothing  before  the  war. 
Concerning  these  states  it  is  noteworthy  that  when  they  began 
to  aid  railways  in  real  earnest,  their  enthusiasm  did  not  last  long. 
Their  experiments  were  almost  as  short  lived  and  as  disastrous 
as  those  of  Illinois,  Indiana  and  Michigan  prior  to  1840. 

^  2.  In  Georgia  the  experiment  of  aiding  the  construction  of 
railways  was  begun  as  early  as  1835-6  on  a  small  scale.'  An 
act  of  December  29,  1836  provided  that  one-fourth  of  the  capi- 
tal stock  of  the  Chattahoochee  Railroad  and  Banking  Company 
should  be  "reserved  for  the  state  of  Georgia  ;"-  and  another  of 
December  21,  1836,  provided  that  "a  railroad  communication  as 
a  state  work  and  with  the  funds  of  the  state"  should  be  made 
from  some  point  on  the  Tennessee  line  near  the  Tennessee 
River  to  some  point  on  the  eastern  bank  of  the  Chattahoochee 
River  suitable  for  the  extension  of  a  branch  to  Athens,  Mad- 
ison, and  other  important  points.  No  greater  sum  than  ^350,000 
was  to  be  "  appropriated  annually  to  the  work  contemplated  by 
this  act,"  unless  a  future  legislature  should  otherwise  direct. 3 
Of  the  stock  of  the  branches  contemplated  to  the  several  towns 
named  the  state  subscribed  one-fourth  on  the  condition  that  this 
would  not  make  more  than  $200,000  to  any  one  branch.  As  no 
provision  had  been  made  for  funds  with  which  to  pay  the 
amounts  to  be  subscribed  by  the  state,  an  act  of  December  29, 
1838,  authorized  "the  sale  of  script  or  certificates  of  state  debt" 

^  Acts  of  Georgia,  1835-6,  pp.  216-217. 

""Ibid.,  p.  184.  '^Ibid.,  1836,  p.  214. 


198  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

to  the  amount  of  1.5  million  dollars  bearing  not  more  than  6  per 
cent,  interest  and  extending  over  a  period  of  thirty  years  before 
redemption  could  be  demanded.  The  faith  of  the  state  was 
"solemnly  pledged  for  the  redemption  of  the  entire  debt,  prin- 
cipal and  interest,"  that  might  be  incurred  by  the  sale  of  such 
script.  To  insure  the  payment  of  interest  the  state  pledged  the 
"income  .  .  .  arising  from  funds"  which  the  state  held  in  the 
"Central  Bank  of  Georgia  and  from  all  other  bank  stock  belong- 
ing to  the  state"  except  that  proportion  already  pledged  to 
schools.'  At  the  close  of  1841  progress  on  the  state  road  was 
so  slow  that  further  advance  beyond  a  certain  point  was  aban- 
doned by  legislative  act,  and  a  special  effort  was  made  to  com- 
plete the  unfinished  portion.^  Although  the  state  found  her 
connection  with  the  Central  Bank  not  only  of  no  assistance,  but 
really  a  burden,  she  soon  felt  able  to  press  forward  with  the 
work  of  construction  of  the  Western  and  Atlantic  Railroad.^  The 
act  of  1 84 1  suspending  operations  on  the  road  was  repealed  in 
1843,  ^"d  work  was  reopened  on  the  portion  of  the  road  formerly 
abandoned.  However,  the  act  also  required  the  governor  to 
take  the  necessary  steps  to  sell  the  road,  if  possible,  for  the 
sum  of  not  less  than  one  million  dollars."*  From  this  time  on 
till  after  the  close  of  the  war  the  activity  of  the  state  of 
Georgia,  as  such,  in  railway  matters,  proved  a  limping  success. 
The  act  of  December  27,  1845,5  made  the  governor  really  the 
manager  of  the  railways.  He  was  to  hire  the  officers  necessary 
to  manage  and  superintend  the  business  of  transportation  on 
the  Western  and  Atlantic  Railroad  ....  and  to  fix  a  reasonable 
rate  of  compensation  for  their  services.  In  1847  anxiety  to  have 
the  road  completed  led  to  the  passage  of  an  act  authorizing  the 
issuing  of  ^375,000  in  6  per  cent,  bonds  of  the  state  to  be  sold 
and  the  funds  applied  to  the  completion  of  the  road.^  In  1850 
the   public   needs   required    the  taxing  of  certain  railway    com- 

^  Acts  of  Georgia,  1838,  p.  223. 

^  Acts  of  Georgia,   1841,   pp.    172-173;    see   also  Comuiittee  Reports,   3d    Session, 
XX  VII.  Congress,  No.  296,  pp.  68-69. 

^Ibid.,  1842,  pp.   27-28.  5  IMJ,^  1845,  p.  165. 

*Ibid.,  1843,  p.  139.  ^Ibid.,  1847,  pp.  301-303. 


INTERNAL-IMPROVEMENT    EXPERIMENTS  I9Q 

panics  one-half  of  i  per  cent,  on  their  "  net  annual  income,"  of 
one  company  "  thirty-one  and  one-fourth  cents  on  every  one  hun- 
dred dollars  worth"  of  the  additional  stock  just  provided  for, 
and  one  company  at  this  same  rate  on  the  capital  stock  "  actually 
paid  in."'  A  general  act  was  passed  in  1852  "  for  the  govern- 
ment and  management  of  the  Western  and  Atlantic  Railroad." 
This  act  sought,  as  it  were,  to  weave  together  the  fragmentary 
strands  of  former  legislation  on  the  subject,  and  to  present  the 
matter  as  a  completed  whole.  All  questions  of  appointment 
and  removal,  the  defining  of  duties  of  various  ofificers,  the  mak- 
ing of  contracts,  the  financial  management,  the  question  of  rates 
and  the  like,  were  all  provided  for  with  considerable  detail.  An 
act  three  days  earlier  had  authorized  the  issue  of  $525,000  in 
twenty-year  6  per  cent,  bonds  of  the  state  to  further  the  prog- 
ress of  the  railroad,^  and  an  act  of  December  4,  1851,  author- 
ized the  issue  of  a  much  smaller  amount  of  bonds  to  buy  suf- 
ficient iron  with  which  to  equip  the  road. 3  In  1856  the  state 
became  more  ambitious,  and  passed  a  law  (February  23)  incor- 
porating the  Atlantic  and  Galena  Railroad  Company  and  granted 
to  it  one  million  dollars  of  aid  in  the  bonds  of  the  state.  The 
company  had  authority  to  construct  a  railway  from  the  inter- 
section of  the  lines  of  Appling,  Ware,  and  Wayne  counties  on 
the  most  practicable  route  to  the  western  boundary  of  the  state 
of  Georgia  at  any  point  between  Fort  Gains  in  the  county  of 
Clay  and  the  junction  of  the  Flint  and  Chattahoochee  rivers  in 
the  county  of  Decatur.  To  the  stock  of  this  company,  which 
might  be  increased  to  five  million  dollars,  the  state  made  a 
subscription  the  outside  limit  of  which  was  one  million  dollars. "♦ 
It  was  the  "  intention  of  the  state  of  Georgia  by  this  act  to 
provide  a  main  trunk  railway  across  her  territory  connecting  the 
Atlantic  with  the  Gulf  of  Mexico."  In  1858,  because  of  the 
fact  that  in  the  management  of  the  Western  and  Atlantic  Rail- 
road losses  had  doubtless  occurred  and  were  "  liable  to  occur" 
unless  frequent  settlements  were  exacted  of  its  "  fiscal  agents,  and 

'^  Acts  of  Georgia,  1849-50,  pp.  378-9.  ^  Ibid.,  1851-2,  p.  116. 

''Ibid.,  1851-2,  p.  114.  t/to/.,  1855-6,  p.  158. 


200  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

unless  the  state  was  invested  with  summary  remedies  against 
defaulters,"  an  act  was  passed  to  secure  "better  government" 
for  the  road  and  "fidelity  in  its  fiscal  agents  and  all  other  per- 
sons" indebted  to  it.' 

In  1 86 1,  as  if  the  state  had  had  not  enough  experience  with 
paper  money  not  directly  redeemable  in  specie,  the  legislature 
authorized  the  Western  and  Atlantic  Railroad  Company  to  issue 
and  put  into  circulation  change  bills  of  the  denominations  of  one 
dollar,  fifty  cents,  twenty-five  cents,  ten  cents,  and  five  cents,  the 
aggregate  amount  of  which  should  "not  exceed  the  sum  of 
S200,ooo."  These  bills  were  to  be  redeemed  by  the  treasurer  of 
the  company  in  "current  bank  notes"  when  presented  in  sums  of 
five  dollars  or  upwards  ;  and  for  the  ultimate  redemption  of  the 
bills  the  "Western  and  Atlantic  Railroad,  its  fixtures  and  rev- 
enues, together  with  the  faith  of  the  state,"  were  pledged.  Such 
bills  were  to  be  received  in  the  payment  of  taxes  and  other  dues 
to  the  state  and  of  all  dues  to  the  Western  and  Atlantic  Rail- 
road.^ This  was  simply  a  cheap  money  experiment  and  proved 
to  be  no  exception  to  the  rule  that  such  experiments  result  in 
very  harmful  complications. ^ 

During  the  war  of  course  little  was  done  in  the  matter  of 
railway  extension  ;  4  and  after  the  war  practically  nothing  was 
accomplished  in  the  further  granting  of  state  aid  to  railways  till 
1 868.  During  these  years,  however,  the  state  carried  a  large 
debt,  which  amounted  to  $5,706,500  on  October  15,  1866;  and 
the  greater  part  of  this  had  been  incurred  for  the  purpose  of 
assisting  in  the  building  of  railroads. ^  Yet  one  at  least  of  the 
roads  owned  wholly  by  the  state,  the  Western  and  Atlantic, 
yielded  a  handsome  sum  to  the  public  treasury.  In  1866  this 
sum  amounted  to  nearly  $600,000^  and  in  1870  to  quite 
one  million  dollars  ^  in  clear  revenue,  if  we  estimate  that  the  annual 

'  Acts  of  Georgia,  1858,  p.  62  ;  and  for   some  facts   in   certain  litigation    growing 
out  of  the  connection  of  the  state  with  this  railroad,  see  Ibid.,  i860,  p.  60. 
^Ibid.,  1861,  pp.  26-28.  3//;/^.,  1873,  p.  318. 

"See  Ibid.,  1862,  pp.  14,  63,  64,  136,  159,  181  and  Ibid.,  1865-6,  pp.  19  and  261. 
^Yoox'h  Manual  of  Railroads,  1868-9,  P-  438. 
f>Ibid.,  1869-70,  p.  463.  T Ibid.,  1870-I,  p.  492. 


INTERNAL-IMPROVEMENT    EXPERIMENTS  201 

charge  on  the  bonds  issued  to  pay  for  the  road  was  only  S2 5 2,000 
annually.'  Whether  or  not  such  an  income  proved  so  great  a 
temptation  to  private  individuals  that  a  private  company  was 
formed  for  the  special  purpose  of  purchasing  the  road,  or  whether 
or  not  this  company,  like  companies  in  other  states,  bought  the 
legislature  in  order  to  get  the  railroad,  cannot  be  asserted.  At 
all  events  the  state  leased  the  road  in  1870  to  a  private  company 
for  twenty  years  at  $300,000  annually.^  When  an  investigation 
of  the  lease  was  made  later  no  corruption  was  brought  to  light, 
and  the  general  assembly  resolved  that  the  lease  was  a  good 
thing,  that  it  secured  "a  fair  sum  certain  for  the  treasury"  and 
removed  "the  road,  with  its  business  complications,  from  the  poli- 
tics of  Georgia,"  which,  of  itself,  was  "a  consummation  devoutly 
to  be  wished." 3  During  the  year  1868  aid  was  extended  to  a 
few  roads  at  the  rate  of  $8000,  $10,000  and  $12,000  per  mile.'' 
In  the  following  year  roads  were  aided  to  the  extent  of  $12,500 
and  $15,000  per  mile.^ 

From  the  foregoing  it  looks  as  if  the  state  were  about  to 
enter  upon  a  great  era  of  railway  building  fostered  by  public 
funds.  But  not  so.  Even  the  party  in  control  of  the  state  when 
the  first  grants  were  made''  prepared  the  way  for  severing  the 
connection  of  the  state  with  the  Western  and  Atlantic  Railroad 
by  means  of  leasing  it  to  a  private  company.^  When  the  war  was 
over  the  aiding  policy  was  brought  to  an  end.  The  ante  bellum 
politicians  again  came  into  power  and  declared  most  of  the  acts 
extending  aid  passed  in  1869-70  unconstitutional,  and  therefore 
null  and  void.     This  action,  together  with  the  lease  of  the  Western 

'See  "Debt  of  Georgia,"  in  Poor's  Manual  of  Railroads,  1879. 

-Acts  of  Georgia,  1870,  pp.  423-427. 

3See  "Joint  Resolution,"  No.  33,  in  Acts  of  Georgia,  1872,  p.  531  ;  also  Acts  of 
Georgia,  1871,  p.  79. 

■•To  the  Macon  and  Augusta,  forty-six  miles,  ^10,000  per  mile.  To  the  Georgia 
Air  Line,  extending  from  the  city  of  Atlanta  to  the  state  line  of  South  Carolina  in  the 
direction  of  Anderson  court  house,  $12,000  per  mile.  To  the  Southern  Georgia  and 
Florida,  $8000  per  mile.     See  Acts  of  Georgia,  1868,  pp.  143-147. 

=  See  "Brunswick  and  Albany,"  "Cartersville  and  Van  Wert."  and  "Dalton  and 
Morgantown"  railroads,  in  Acts  of  Georgia,  1869. 

^  Acts  of  Georgia,  1869,  p.  149.  t  Ibid.,  1870,  pp.  423-427. 


202  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

and  Atlantic  Railroad,  relieved  Georgia  practically  from  all  her 
railroad  enterprises.  A  general  law  of  1870  (September  30) 
provided  that  "the  guarantee  of  the  state  should  not  be  endorsed 
upon  the  bonds  of  anv  railroad  until  an  amount  equal  to  the 
amount  of  bonds"  for  which  the  guarantee  or  endorsement  of 
the  state  applied  had  been,  in  good  faith,  first  "expended  bv  the 
stockholders  of  the  road."^  About  three  years  later  (February 
25,  1874)  the  state  took  further  steps  to  release  herself  from 
complications  arising  from  aiding  railroads.  All  aid  heretofore 
granted  and  not  yet  received  by  the  railway  companies  so  as  to 
become  a  vested  right,  was  declared  null  and  void.^  And  a  few 
days  following  this  act  a  further  act  was  passed  turning  over  the 
three-fourths  of  the  one  million  dollars  of  stock  owned  by  the  state 
in  the  Atlantic  and  Gulf  Railroad  to  the  companv  on  the  grounds 
that  the  recent  war  had  inflicted  such  serious  damaofes  on  the 
road  that  it  was  practically  valueless  to  the  state  and  that  the 
end  to  be  attained  could  be  more  easily  secured  bv  transferring 
this  portion  of  stock  to  the  company. ^  A  further  discovery  was 
made  in  1875  that  the  bonds  granted  to  the  Alabama  and  Chat- 
tahoochee Railroad  Company  under  the  authority  of  the  act  of 
March  20,  1869,  were  granted  in  violation  of  the  constitution  and 
were  therefore  declared  of  no  effect  (February  27,  1875).'' 
Measures  were  taken  at  this  session  also  to  secure  the  state  in 
case  any  of  the  roads  to  which  state  aid  had  been  granted  should 
be  in  danger  of  being  sacrificed  by  hard-pressed  companies  for 
very  small  amounts.  The  governor  was  authorized  to  bu}-  in 
such  roads,  bidding  as  high  as  the  amount  of  state  aid  granted. ^ 
In  February  1876  the  governor  was  authorized  to  sell  one  of 
the  railways  in  order  to  secure  for  the  state  the  funds  loaned  to 
the  company.^  In  the  following  year  the  state  passed  a  law  pro- 
viding for  the  lease  or  sale  of  the  Macon  and  Brunswick  Rail- 
road. The  lessees  were  to  expend  within  two  years  after  the 
lease  $200,000  for  permanent  improvements  ;  and  after  certain 
specified   additional  work  was    done   the   company  should  have 

^  Acts  of  Georgia,   1870.     '^ Ibid.,   1874,  p.  9^6.       ^Ibid.,   1875,  p.  14. 
''Ibid.,   1874,  p.  98.        '■Ibid.,   1S75,  P-  I3-        ^ Ibid.,   1876,  p.  123. 


INTERNAL-IMPROVEMENT    EXPERIMENTS  2O3 

the  option  of  purchasing  the  road  for  $1,250,000.'  Several  years 
later  the  state  compromised  with  the  Ashcville  and  Spartans- 
burg  Railroad  for  only  a  portion  of  the  claim  held  against  it. 
In  1877  a  small  amount  of  aid  was  granted  to  the  Marietta  and 
Northern  Georgia  Railroad  Company  ;  and  also  the  net  revenues 
from  convict  labor  were  granted  to  this  company  annually  till 
the  road  was  completed  to  the  North  Carolina  line.^  Notwith- 
standing this,  the  interest  which  the  state  had  in  railways  was 
now  very  small,  the  chief  interest  being  in  the  Western  and  Atlan- 
tic and  the  Macon  and  Brunswick,  both  of  which  had,  for  a  long 
time,  been  leased.  Beginning  with  1870,  misunderstandings  arose 
between  the  lessees  and  the  state  :  since  then  much  time  and 
money  have  been  consumed  in  litigation,  and  the  charter  privi- 
leges of  the  company  have  been  extended  till  this  litigation  can 
be  concluded. 3 

§  3.  Prior  to  1850  Tennessee  had  aided  banks  and  turnpike 
companies  to  the  amount  of  $323,000  ;"•  but  after  1850,  although 
the  state  fostered  turnpikes  to  some  extent,  her  chief  attention 
was  directed  towards  aiding  railways.  Attempts  at  aiding  rail- 
ways had  been  made  prior  to  1848,  but  none  were  carried 
through  to  completion.  At  this  time,  however,  the  people 
became  deeply  interested  and  a  new  j)lan  was  adopted.  "The 
distinct  feature  of  this  plan  was  that  the  state  endorsed  the 
annual  bonds  of  the  companies  instead  of  issuing  its  own  bonds. 
The  state  was  secured  by  a  lien  on  the  whole  stock  of  the  com- 
panies and  on  the  road  fixtures.  Curiously  enough,  however,  these 
bonds  sold  for  less  than  par,  whereas  the  bonds  of  the  state  were 
at  or  above  par.  This  plan  proved  to  be  not  more  satisfactory 
than  the  other.  Its  most  glaring  difficulties  were  the  failure  to 
devise  means  by  which  the  state  could  examine  into  the  finan- 
cial condition  of  the  corporations  whose  bonds  had  been  endorsed, 

^Ac/s  of  Georgia,  1879,  pp.  I15  and  124;  also  ibid.,  1887,  p.  913. 
"^  Ibid.,  1877,  p.  29;  also  ibid..  1881,  p.  145. 
^ Ibid.,  1890,  p.  75;  ibid.,  1890-1,  p.  280. 
*  Phelan,  Histoiy  of  Tennessee,  p.  293. 


204  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

and  the  failure  to  reserve  to  the  state  the  power  of  legislating  to 
protect  its  own  interests."  In  addition  to  this,  as  the  state  was 
the  endorser  and  guarantor  of  the  bonds  issued,  its  ability  to 
protect  itself  "depended  on  the  actions  of  those  over  whom  it 
had  little  control."  "  In  1849-50  an  attempt  was  made  to  cor- 
rect these  defects.  The  state  was  to  issue  its  own  bonds,  and 
have  vested  in  it  the  title  to  the  roads  to  secure  the  debt  incurred 
for  their  benefit,  and  individual  stockholders  were  required  to 
accept  and  ratify  the  act.  But  again  the  legislature  failed  to 
provide  the  measures  by  which  information  could  be  obtained  of 
the  condition  of  the  companies  and  also  by  which  the  state  could 
legislate  as  a  sovereign  instead  of  resorting  to  the  courts  as  an 
individual."  ' 

It  was  now  time  for  the  legislature  to  exhibit  some  business 
sense,  if  it  possessed  any.  Consequently  an  act  of  February  1 1, 
1852,  was  passed  "to  avoid  the  defects  of  all  previous  enact- 
ments ;  .  .  .  .  the  bonds  of  the  state  were  issued  in  its  sovereign 
capacity  and  for  the  payment  of  which  its  credit  was  pledged 
and  without  involving  itself  in  any  relation  of  trust  or  partner- 
ship  The  act  of  February  ii,  1852,  was  called   an  act  to 

establish  a  system  of  internal  improvements  in  the  state."  Each 
company  being  aided  had  to  secure  a  boija  fide  subscription  to  its 
capital  stock  sufficient  to  complete  the  roadbed  and  bridges  for 
the  whole  line  of  the  road  ;  then  the  state  would  grant  $8000  per 
mile  for  the  purpose  of  purchasing  the  rails  and  otherwise  equip- 
ping the  roadway.  The  state  was  to  retain  a  lien  on  the  rails  to 
secure  herself.  If  the  companies  failed  to  pay  the  interest,  the 
state  was  to  sell  the  rails  to  reimburse  her  for  her  outlay.  At 
the  end  of  five  years  the  companies  aided  were  to  set  aside  a 
small  part  of  their  earnings,  i  per  cent,  per  annum,  upon  the 
amount  of  bonds  loaned  to  be  used  in  purchasing  the  bonds  of 
the  state  ;  these  bonds  were  to  be  turned  over  to  the  state,  cred- 
ited to  the  companies  and  to  be  used  with  interest  accruing  on 
them  as  a  sinking  fund  for  the  cancellation  of  the  indebtedness 
to    the   state.     The   presidents  of  the   companies  were  to   make 

'  Phelan,  History  of  Tennessee,  p.  290. 


INTERNAL-IMPROVEMENT    EXPERIMENTS  2O5 

semi-annual  reports  to  the  state.  The  number  of  miles  contem- 
plated to  be  aided  by  the  act  was  about  looo;  at  $8000  per 
mile,  the  total  aid  granted  by  the  act  would  then  amount  to 
eight  million  dollars.  At  6  per  cent.,  the  rate  of  interest  which 
seems  to  have  been  stipulated,'  the  annual  interest  dues  of 
$480,000,  in  case  the  state  should  have  to  pay  the  interest,  does 
not  seem  a  heavy  burden  for  a  state  whose  taxable  wealth  was 
159  million  dollars.^ 

The  above  act  was  amended  February  8,  1854,  increasing  the 
amount  loaned  per  mile  to  $10,000;  and  whereas  under  the  former 
act  a  division  of  twenty  miles,  after  the  first  division  of  thirty 
miles  had  been  completed,  could  be  aided  at  a  given  time,  a 
clause  was  inserted  in  this  act  providing  that  a  division  of  only 
<ten  miles  could  be  aided.  A  later  act,  February  21,  1856, 
inci  eased  the  sinking  fund  to  2  per  cent.  The  whole  amount  of 
bonds  issued  in  Tennessee  before  the  war  amounted  to  $14,841,- 
000.^  As  in  Missouri,  the  breaking  out  of  the  war  introduced 
an  indeterminable  quantity  into  the  question  of  whether  the  state 
acted  wisely  in  aiding  railways.  It  is  the  opinion  of  an  able 
writer,  in  speaking  of  the  state  debt,  that  "  had  it  not  been  for 
the  war  and  the  Brownlow  (governor)  administration,  the  debt 
of  Tennessee  would  doubtless  have  been  paid  in  full."  3  Follow- 
ing the  war,  however,  there  seems  to  have  been  as  low  a  stage  of 
public  morality  in  Tennessee  as  there  was  in  Missouri.  Mr. 
Phelan,  in  his  excellent  history  of  Tennessee,  says  of  this  period, 
"As  soon  as  the  war  closed,  what  is  now  called  a  raid  was  made 
on  the  treasury.  From  April  1866  to  December  1868,'*  a  period 
which  has  been  described  as  the  'carnival  of  revelry  and  corrup- 
tion,' at  a  time  when  every  industry  and  enterprise  had  been 
overthrown  by  the  war  and  when,  by  the  loss  of  slaves,  the 
assessed  value  of  taxable  property  of  the  state  had  sunk  from 
$388,936,000  (i860)  to  $225,393,000  (1867),  $14,393,000  were 

^  De  Bow's  Review,  vol.  xiii.  p.  163. 
*  Phelan,  History  of  Tennessee,  p.  293. 
'i  Ibid.,  p.  291. 

'•The  coincidence  of  the  periods  of  public  corruption  in  Tennessee  and  Missouri  is 
noteworthy;  in  Missouri  it  extended  from  November  8,  1866,  to  March  31,  1868. 


206  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

issued  to  railways,  JSi  1 3,000  to  turnpikes,  besides  $4,941,000 
issued  under  the  act  of  1868  to  fund  the  war  debt  and  $2,200,000 
under  an  act  of  1868  to  fund  the  past  due  coupons."  These 
amounts  had  increased  the  state  debt  in  two  years  to  $21,647,000. 
In  addition  to  this  an  act  was  passed  May  24,  1866,  which  incor- 
porated several  turnpike  companies  and  turned  over  the  stock  of 
the  state  in  the  East  Tennessee  and  Georgia  Raih^oad,  amount- 
ing to  $425,000,  to  the  turnpike  companies.  With  this  help  and 
the  $113,000  issued  between  1868  and  1870,  and  some  private 
subscriptions  paid  in  work,  the  turnpike  companies  succeeded  in 
building  during  the  time  twenty  miles  of  road. 

A  number  of  acts  during  the  years  1 865-1 869,  were  passed 
in  the  interests  of  the  railroad  companies.  Because  a  number  of 
these  acts  were  passed  "under  circumstances  of  such  notorious 
fraud  and  so  clearly  in  defiance  of  the  constitution  as  soon  as  the 
Brownlow  and  Senter  regime  was  overthrown  steps  were  taken  to 
repudiate  the  bonds  which  were  issued  contrary  to  law."'  Because 
of  the  likelihood  of  having  the  state  reconstructed  at  the  hands 
of  Union  men,  however,  the  matter  of  repudiation  was  dropped.' 

The  whole  debt  of  the  state  of  Tennessee,  incurred  for  rail- 
road purposes,  was  $29,234,000.  Up  to  1880  $5,330,000  of 
those  bonds  issued  before  the  war  and  $11,258,000  of  those 
issued  after  the  war  were  canceled.  And  January  1879  the 
whole  state  debt  was  $27,008,480,  of  which  $7,635,000  was 
incurred  on  account  of  railways.  This  experiment  satisfied  the 
people  of  Tennessee  fully  as  to  the  profitableness  of  aiding  rail- 
ways. The  Constitution  of  1870  removes  the  possibility  of  any 
further  internal  improvements,  as  a  political  or  economic  scheme 
at  the  expense  of  or  by  the  aid  of  the  state  ;  it  enacts  that  "the 
credit  of  this  state  shall  not  hereafter  be  given  or  loaned  in  aid 
of  any  person,  association,  company,  corporation  or  municipal- 
ity." = 

§  4.  In  Virginia  the  usual  form  of  aiding  internal  improve- 
ments was  that  of   taking  stock  in  the  various  companies.     The 

'  Phelan,  History  of  Tennessee,  p.  294.  ^  Ibid.,  p.  295. 


INTERNAL-IMPROVEMENT    EXPERIMENTS  20/ 

agent  for  the  state  was  the  state  Board  of  Public  Works.  From 
1850  to  1857  much  aid  was  granted,  or  rather  the  state  took  a 
great  deal  of  stock  in  various  turnpike,  canal  and  railroad  com- 
panies at  the  rate  of  three-fifths  of  the  whole  stock.  Some 
direct  subscriptions  of  aid  were  also  made.'  In  1855-6  not 
many  new  loans  were  made,  and  the  state  had  to  borrow  to  pay 
old  subscriptions.^  Some  canal  companies  were  already  in 
default  and  the  state  was  making  ready  to  foreclose  the  mort- 
gage on  one.3  By  1857  the  legislature  felt  that  the  state  ought 
to  be  getting  more  out  of  her  investments  than  she  was. 
Accordingly  an  act  was  passed  to  make  the  "investments  of  the 
commonwealth  more  productive  by  enforcing  payment  of  inter- 
est and  sinking  fund  (sic)  on  loans  to  internal  improvement 
companies  ;  of  dividends  on  preferred  stock,  and  the  interest  on 
the  bonds  of  such  companies  guaranteed  by  the  state.""*  This 
act  was,  however,  nothing  more  than  the  laying  on  of  a  penalty 
for  not  doing  what  the  state  wanted  done.  In  1858,  since  the 
state  was  pressed  to  make  payments  of  subscriptions  already 
made,  it  authorized  the  Board  of  Public  Works  to  purchase 
those  enterprises  in  which  the  state  held  an  interest.  Subscrip- 
tions to  new  enterprises  were  made  and  subscriptions  to  old  ones 
were  enlarged,  however,  just  as  if  the  treasury  were  overflow- 
ing.5  In  1859-60  small  subscriptions  were  made  to  turnpike 
and  railroad  companies.^  Three  years  later  an  act  was  passed  to 
suspend  the  payment  of  further  sums  on  the  subscriptions 
authorized  before  the  breaking  out  of  the  Civil  War,  made  to 
those  railway  and  turnpike  companies  in  cases  where  private 
stockholders     had    not     paid    up   their   full    subscriptions. ^     In 

^ The  following  are  cases  of  direct  grants  and  subscriptions:  Stock  subscription 
of  three-fifths,  in  one  company  {Acts  of  Virginia,  1850-1,  pp.  62,  65);  like  subscrip- 
tions {Acts,  1852-3,  pp.  65,  66,  67,  69,  136,  137);  direct  grants  {ibid.,  pp.  68,  136, 
137);  subscriptions  of  three-fifths  again  (^c/^,  1853-4,  pp.  35,  45,  47-49)  ;  definite 
grants  {ibid.,  pp.  35,  46).  Script  which  was  to  be  issued  by  county  courts  was  to  be 
exchangeable  for  stock  {Acts,  1853-4,  p.  39). 

"  Acts  of  Virginia,  1855-56,  pp.  83  and  1 10. 

^Ibid.,  p.  84.  ^/bid.,  pp.  87-S9.  1  Ibid.,  1864,  p.  38. 

*Ibid.,  1857-8,  p.  6.  ^Ibid.,  1859-60,  pp.  278  et  seq. 


208  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

1 865-6,  when  the  state  debt  had  reached  the  unprecedented  sum 
of  45  million  dollars  incurred  for  the  purpose  of  assisting  turn- 
pikes, canals  and  railways,  and  no  small  part  of  which  was  of  very 
long  standing,'  the  state  began  to  take  measures  to  free  herself 
to  some  extent  from  her  burdens  by  selling  out  her  interests 
and  demanding  release  from  unpaid  subscriptions.^  Turnpikes 
were  turned  over  to  the  counties  in  which  they  were  located. ^ 
The  interest  of  the  state  was  to  cease  and  to  be  vested  in  the 
companies.  During  the  following  year  the  state  granted  no  fur- 
ther aid,  released  a  lien  held  on  one  road  and  offered  to  sell  her 
interest  in  the  Norfolk,  Petersburg  and  Covington  Railroad."* 
The  Board  of  Public  Works  was  made  the  supervisor  rather  than 
the  manager  of  the  state's  interests.^  During  the  same  year 
(1866-7)  the  state  ordered  the  Board  to  sell  the  stock  owned  by 
the  state  in  the  London  and  Hampshire  Railroad,  and  to  lease 
the  Alexandria  Canal  for  ninety-nine  years.^  After  this  piece- 
meal policy  had  gone  on  for  a  while  the  state  determined  to 
make  an  end  of  the  whole  matter.  The  Constitution  adopted  in 
accordance  with  the  Acts  of  Congress  of  March  and  July  1867 
provides,  in  the  usual  phraseology,  that  "the  credit  of  the  state 
shall  not  be  granted  to  or  in  aid  of  any  person,  association,  or 
corporation,"  and  that  "the  state  shall  not  subscribe  to  or 
become  interested  in  the  stock  of  any  company,  association  or 
corporation."  ^ 

§  5.  Passing  by  the  early  activity  of  South  Carolina  in  internal- 
improvement  matters,  we  find  the  state  in  1850-1854  responding 
quite  liberally  to   requests   for  aid   by  many  railway  companies.^ 

'  See  Committee  Reports,  XXVII.  Congress,  3d  Session,  No.  296,  p.  60. 

'Acts  of  Virginia,  1865-6,  pp.  221-222.  ^ Ibid.,  p.  725. 

^  Ibid.,  pp.  223-224.  ^  Ibid.,  pp.  812  and  813. 

*  Ibid.,  1866-7,  PP-  707,  890  and  891.  t  Ibid.,  1869-70,  p.  626. 

*See  House  Journal  {South  Carolina),  1850,  pp.  54,  96,  loi,  109,  123  and  Acts  of 
.South  Carolina,  1850,  p.  60.  December  25,  1850,  the  state  took  ^125,000  of  stock 
in  the  Spartanburg  and  Union  Railroad.  See  also  Acts  of  South  Carolina,  1851, 
"Reports  and  Resolutions,"  p.  246.  In  1850  the  state  took  ^50,000  in  stock  in  the 
King's  Mountain  Railroad  {Acts,  185 1,  102).  In  1852  the  state  guaranteed  Ji, 250,000 
in  bonds  for  the  Blue  Ridge  Railroad  Company,  and  subscribed  ^100,000  to  the  capi- 


INTERNAL-IMPROVEMENT    EXPERIMENTS 


209 


And  during  this  time  a  small  sum  in  dividends  was  paid  to  the 
state  on  her  railway  investments.^  Notwithstanding  the  liberal 
endorsements  on  bonds  the  railway  debt  of  the  state  in  1856  was 
only  Si, 742, 300.^  After  1856  the  state  continued  the  policy  of 
granting  aid  but  not  in  large  amounts.  Some  help  was  effected 
by  simply  transferring  to  some  other  companies  the  bonds 
granted  to  one  company  which  had  proved  unsuccessful.^  Of 
course  the  war  worked  great  damage  to  the  railway  enterprises 
of  the  state,  and  in  1865,  because  of  the  financial  weakness  of 
the  companies,  the  state  postponed  the  closing  of  her  lien  on 
them."*  At  this  time  not  much  additional  aid  was  granted,  but 
some  further  transfers  of  grants  were  made.^  It  was  not  till 
1 868  that  one  great  grant  of  aid,  and  the  only  one  to  any  one  rail- 
road, was  made;  this  grant  of  three  million  dollars  additional 
aid,  making  in  all  four  million  dollars,  was  made  to  the  Blue 
Ridge  Railroad  Company  September  15,  1868.  This  grant  was 
not,  however,  of  very  long  standing.  It  increased  the  debt  of 
the  state  to  an  amount  ($7,572,295)  so  large  as  to  be    thought 

tal  stock  of  the  Cheraw  and  Darlington  Railroad  {Acts,  1852,  p.  200),  ^42,500  to  the 
Pendleton  Railroad  Company  {Acts,  p.  i6o),  and  $250,000  to  the  Spartanburg  and 
Union  Railroad  Company  {Acts,  p.  199).  In  1854  a  conditional  grant  of  $500,000 
was  made  to  the  Blue  Ridge  Company  {Acts,  1854,  p.  372)  and  $270,000  to  the 
Charleston  and  Savannah  Railroad  Company  {Acts,  p.  346). 

'See  "South  Carolina  Railit)ad  Company"  in  Acts  of  South  Carolina,  1850. 


^   To  the  Charlotte  and  South  Carolina  Railroad 
To  the  Greenville  and  Columbia  Railroad 
To  the  Laurens  Railroad 
To  the  King's  Mountain  Railroad 
To  the  Wilmington  and  Manchester  Railroad 
To  the  Spartanburg  and  Union  Railroad 
To  the  Northwestern  Railroad 
To  the  Cheraw  and  Darlington  Railroad 
To  the  South  Carolina  Railroad 
To  the  Southwestern  Railroad  Bank 
To  the  Pendleton  Railroad 
To  the  Blue  Ridge  Railroad 


31.700 

348,100 

50,000 

50,000 

200,000 

250,000 

200,000 

100,000 

62,000 

15,000 

35,000 

400,000 


$1,742,300 
— See  "Reports  and  Resolutions,"  Acts  of  South  Carolina,  1856,  p.  5. 
^Acts  of  South   Carolina,   1866,  pp.  303  and  543;  ibid.,  1862,  p.  156. 
^  Ibid.,  1865,  pp.  309-310.  ^Ibid.,   1866,  p.  415. 


2  10  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

prejudicial  to  the  interests  of  the  state.'  On  the  second  of 
March  1872  an  act  was  passed,  in  the  preamble  of  which  it  was 
stated  that  these  bonds  then  outstanding  were  a  serious  injury 
and  prejudice  to  the  credit  of  the  state.  The  act  was  passed  "to 
relieve  the  state  of  South  Carolina  of  all  liability  for  its  guar- 
antee to  the  bonds  of  the  Blue  Ridge  Railroad  Company  by 
providing  for  the  destruction  of  the  same."^  The  sum  of  1.8 
million  dollars  in  treasury  certificates  was  to  be  issued  instead 
of  the  bonds,  and  of  these  one- fourth  were  to  be  retired  annu- 
ally. An  amendment  to  the  constitution  of  the  state  was  pro- 
posed at  the  same  session  which  provided  for  the  relief  of  the 
state  from  the  four  million  dollar  indebtedness  to  the  Blue 
Ridge  Railroad  Company,  to  the  effect  that  no  further  debt  of 
any  kind,  except  for  ordinary  and  current  business  of  the  state, 
should  be  created,  unless  authorized  by  a  two-thirds  vote  of  the 
people.  This  amendment,  proposed  March  3,  1862,  was  car- 
ried at  the  next  election  and  added  to  the  Constitution  January 
29,    1873.^ 

§  6.  North  Carolina  began  aggressive  work  in  aiding  railway 
construction  in  1848-9  by  making,  among  other  grants,  a  grant 
of  two  million  dollars,  in  "certificates  of  indebtedness"  bearing 
6  per  cent,  interest  and  running  for  thirty  years,  to  the  North 
Carolina  Railroad  Company.  This  large  grant  was  made  at  the 
rate  of  one  dollar  of  public  funds  for  every  dollar  of  private 
funds  spent. ■♦  The  prospective  railroad  debt  of  the  state  had 
not,  however,  by  1851,  reached  more  than  $2,806,000  in  the 
form  of  stocks  and  bonds  guaranteed. ^  During  1852  much 
attention  was  given  in  the  state  to  plank  roads,  though  as  yet 
not  much  aid  was  granted  to  them    by   the   state.^     During   this 

'Poor's  Manual  of  Railroads,   1871-2,  p.  569;  il>id.,   1872-3,  pp.  678-9. 
^  Acts  of  South   Carolina,   1871-2,  p.  79. 
^Statutes  at  Large  (S.  C),  1872,  p.  296;  i/iiJ.,  1873,  p.  467. 
'^  Acts  of  North   Carolina,   1848-9,  pp.  153,  155,  and    158. 

5  See  "Treasurer's  Report"  in  Acts  of  North  Carolina,  1850-1,  Appendix,  pp.  19- 
20;  also  Acts  of  North   Carolina,  1852,  p.  557. 
^  Acts  of  North   Carolina,   1852,  pp.  167-483. 


INTERNAL-IMPROVEMENT    EXPERIMENTS  211 

year,  also,  the  conditions  of  the  two  million-dollar  grant  of  1849 
were  made  easier  for  the  state."  The  activity  in  aiding  railway 
construction  continued  vigorous  until  the  breaking  out  of  the 
war.  In  1854-5  the  governor  was  authorized  to  issue  one  mil- 
lion dollars  additional  stock,  to  be  preferred  stock,  to  assist  the 
railways.^  During  the  next  year  aid  was  granted  to  the  Western 
Railroad  Company  to  the  extent  of  $400,000  in  6  per  cent, 
thirty-year  bonds. 3  In  1 860-1  aid  was  granted  to  the  Chat- 
tanooga Railroad  Company  to  the  amount  of  $200,000,  to  the 
Western  Railroad  Company  $200,000  additional,  and  to  the 
Wilmington,  Charlotte  and  Rutherford  Company  one  million 
dollars."  The  earnestness  of  the  state  in  her  policy  of  aiding 
railways  was  further  shown  in  resolutions  passed  in  favor  of 
such  activity .5  After  the  close  of  the  war  the  bonds  of  the 
Wilmington,  Charlotte  and  Rutherford  Railroad  were  refunded.^ 
The  policy  of  aiding  railways  was  continued  after  the  War,  and 
additions  were  made  to  the  debt  of  the  state  in  other  ways  till  the 
debt  amounted,  October  i,  1870,  to  a  total  of  $29, 960, 000. ^  The 
credit  of  the  state  was  undermined  by  this  reckless  granting  of 
bonds  to  private  companies.  "The  bonds  issued  were  delivered 
over  to  many  of  the  railway  companies  almost  before  the  com- 
mencement of  the  work  of  construction,  and,  as  might  have  been 
expected,  were  forced  upon  the  market  at  ruinously  low  prices  ;  " 
moreover,  the  proceeds  derived  from  these  bonds  were   "squan- 

'  Acts  of  1848-9,  p.  153;  ibid.,  1852,  p.  523. 

''Acts  of  North  Carolina,  1854-5,  p.  64;  also  Private  Laws  of  North  Carolina, 
1856-7,  p.  71. 

^Acts  of  North   Carolina,  1 858-9,  p.  208. 

"■  Ibid.,  1860-I,  pp.  124,  152,  155,  168  and   173. 

^ Ibid.,  1861,  pp.  133-134;  see  also  "Ordinances,"  Acts  of  North  Carolina,  1S62, 
Appendix,  pp.  31  and  82. 

^  Acts  of  North   Carolina,  1865,  p.  4. 

'See  Poor's  Manual  of  Railroads,  1868,  p.  430,  and  1870,  "Debt  of  North  Caro- 
lina." The  state  stiJl  owned  railroad  stock  in  1868  {Acts,  1868,  p.  3)  and  appropria- 
tions to  the  Western  North  Carolina  Railroad  still  held  good  (Acts,  1868,  p.  28);  two 
million  dollars  were  granted  to  the  Eastern  and  Western  Railroad  Company  {Acts, 
1868,  p.  203),  $850,000  to  the  Edenten  and  Suffolk  {Acts,  1868,  p.  344),  and  1.5  mil- 
lion dollars  to  the  Williamstown  andTarboro  Railroad  {Acts,  1868,  p.  90) ;  see  also  ibid., 
pp.  252-3  for  further  evidence  of  a  vigorous  policy  of  state  aid. 


212  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

dered  in  one  way  or  another  without  securing  any  useful 
'results.'"  Measures  had  already  been  taken,  however,  to  restore 
the  credit  of  the  state.  In  1869-70  an  act  was  passed  to 
restore  the  credit  of  the  state  and  to  facilitate  the  construction 
of  all  unfinished  railroads.  All  bonds  in  the  hands  of  any  rail- 
way president  or  company  not  disposed  of  were  to  be  returned 
to  the  treasury  of  the  state. ^  In  March  1870  all  acts  of  the  ses- 
sion of  1868-9  were  repealed  and  the  bonds  ordered  returned. 
Other  measures  were  passed  to  protect  the  credit  of  the  state 
and  no  new  loans  were  made.^  In  1873  the  treasury  receipts 
were  sufficient  to  cover  only  the  current  expenses  of  the  state* 
The  debt  went  on  increasing,  chiefly  through  non-payment  of 
interest,  till  it  reached,  in  1878,  the  colossal  sum  of  $44,730,- 
697.S  However,  as  things  went  in  North  Carolina  at  this  time, 
so  great  a  debt  was  not  hard  to  manage.  In  the  funding  act  of 
February  1879  the  debt  was  scaled  down  till  it  could  be  easily 
controlled.  The  bonds  issued  before  the  war  were  funded  at  40 
per  cent.,  the  new  railroad  bonds  were  funded  at  25  per  cent., 
and  the  funding  bonds  of  1866  and  1868  were  refunded  at  15 
per  cent.;  all  overdue  coupons  and  interest  were  to  be  surren- 
dered ;  the  special  tax  bonds  and  the  bonds  of  the  Chatham 
Railroad  and  of  the  Williamstown  and  Tarboro  Railroad,  and 
the  bonds  of  the  penitentiary,  under  the  acts  of  1868,  were 
"  left  out  in  the  cold."  5  The  experience  of  North  Carolina  is 
one,  at  least,  to  which  no  advocate  of  state  activity  in  railway 
construction  can  point  with  pride. 

§  7.  Louisiana  also  began  the  aiding  of  internal  improvements 
as  early  as  1837^  ^^^  kept  it  up  with  varying  degrees  of  inten- 
sity till  the  breaking  out  of  the  war,  notwithstanding  the   neces- 

'Poor's  Manual  of  Railroads,  1871-2,  p.  591. 

^Acts  of  North  Carolina,  1869-70,  pp.  78-120. 

^Public  Acts  of  North  Carolina,  1870,  p.  89. 

^Poor's  Manual  of  Railroads,   1873-4,  P-  731-  "^ Ibid.,  1879,  10 10. 

^  Acts  of  Louisiana,  1837,  p.  no.  In  1838  one  steamship  company  was  aided  to 
the  extent  of  $200,000  in  bonds  {Acts,  1838,  pp.  85  and  312).  In  1839  the  Clinton 
and  Port  Hudson  Railroad  was  aided   to  the  amount  of  $500,000  {Acts,  1839,  p.  214). 


INTERNAL-IMPROVEMENT    EXPERIMENTS  213 

sity  of  having  to  pay  interest  on  the  bonds  of  the  defaulting 
Mexican  Gulf  Railroad  as  early  as  184 1.  As  early  as  this  the 
legislature  felt  the  need  of  a  general  law  regarding  the  railway 
companies  in  order  to  protect  the  credit  of  the  state.'  Accord- 
ing to  a  general  law  passed  in  1853  the  treasurer  of  the  state 
could  subscribe  one-fifth  of  the  capital  stock  of  an}'  railroad  or 
plank  road  company  organized  in  the  state,  each  payment,  how- 
ever, to  be  authorized  by  a  special  act.  Payments  were  to  be 
made  by  the  state  in  the  proportion  of  one-fifth  of  the  funds 
paid  in  by  private  subscribers,  and  the  governor  was  to  appoint 
three  directors  in  each  company  aided. ^  In  1854  the  state 
asked  Congress  for  a  grant  of  lands  to  be  used  in  building  rail- 
roads,3  and  in  1856  a  grant  of  land  was  made  by  Congress  to 
Louisiana  for  that  purpose.*  By  this  grant  the  Vicksburg, 
Shreveport  and  Texas  Railroad  received  420,000  acres.  The 
state  was  not,  however,  indisposed  to  the  making  of  further 
grants  of  bonds,  and  March  16,  1857,  made  a  grant  of  two  million 
dollars  to  the  New  Orleans  and  Baton  Rouge  Railroad  Com- 
pany. A  special  tax  to  be  called  the  Internal  Improvement  tax 
was  ordered  to  be  levied  for  the  payment  of  interest  on  the 
bonds.  The  tax  was  to  be  increased  as  additional  bonds  were 
issued. 5  Beginning  with  iSOo,  however,  the  policy  of  aiding 
internal  improvements  grew  less  vigorous.  The  New  Orleans, 
Jackson  and  Great  Northern  Railroad  was  favored,  to  be  sure 
(January  18,  i860),  but  only  by  the  exemption  of  its  capital 
stock  from  taxation  for  fifteen  years.*^  In  Louisiana  as  in  other 
states  little  was  done  during  the  war  and  not  much  for  some  time 
afterwards.  A  good  deal  of  aid  was  granted  in  1869,  1870  and 
1871,  chiefly  by  granting  bonds  at  the  rate  of  ^12,500  per  mile. ^ 
A  large  part  of  the  grant  of  1871  consisted,  however,  of  2.5  mil- 

^  Acts  of  Louisiana,  1841,  p.  458  ;  see  also,  1845,  p.  36. 

""Ibid.,  1853,  pp.  I93-IQ7-  ''Ibid.,  1857,  p.  76. 

'^  Ibid.,  1854,  pp.  12  and  33.  '^  Ibid.,  1857,  p.  123. 

^ Ibid.,  i860,  p.  9.  See  also  "  Ordinance  No.  29,"  of  the  Convention  of  the  state 
of  Louisiana,  1861,  in  Official  Journal  of  the  Proceedings  of  the  Convention,  pp.  278-9  ; 
also  Acts  of  Louisiana,  1862,  p.  46. 

T  Acts  of  Louisiana,  1869,  p.  22  ;   1 870,  p.  7  ;  and  1871,  p.  21 1  et  seq. 


2(4  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

lion  dollars  in  the  direct  bonds  of  the  state  given  in  exchange  for 
the  second-mortgage  bonds  of  the  New  Orleans,  Baton  Rouge  and 
Vicksburg  Railroad  guaranteed  by  the  state.'  The  total  of  rail- 
road and  canal  aid  of  the  state  (January  i,  1870)  was  ^3,595,- 
000'  and  (January  i,  1873)  the  total  debt  of  the  state,  includ- 
ing all  kinds  of  debt,  was  $21,801,000.2  During  this  year 
(1873),  as  the  New  Orleans,  Baton  Rouge  and  Vicksburg  Rail- 
road Company  wanted  the  state  to  issue  first-mortgage  bonds  of 
its  own,  the  state  took  this  opportunity  of  severing  its  connec- 
tion with  the  road  as  guarantor  of  second-mortgage  bonds  to  the 
extent  of  $12,500  per  mile.'< 

By  1874  the  state  came  to  the  conclusion  that  the  aiding  of 
railroads  and  canals  was  unprofitable.  In  the  funding  act  of 
that  year  it  is  provided  that  "all  grants  of  state  aid  hereafter 
made,  whether  of  bonds,  endorsements,  subscriptions  of  stock 
which  have  become  lapsed  or  forfeited,  be  and  the  same  are 
hereby  repealed  and  annulled,  nor  shall  the  state  hereafter 
modify,  novate  or  extend  any  contract  heretofore  made  for  the 
giving  of  state  aid  in  any  form  or  under  any  pretext. "'  And  in 
accordance  with  an  act  amendatory  of  this  act  suspending  the 
funding  of  millions  of  indebtedness  until  it  could  be  passed 
upon  by  the  Supreme  Court  of  the  state,  the  $875,000  of  second- 
mortgage  bonds  "guaranteed"  by  the  state  and  $12,500  direct 
bonds  of  the  state  issued  under  the  acts  respectively  of  February 
17,  1869,  and  April  20,  1871,  were  repudiated  on  the  grounds 
that  the  endorsed  bonds  were  "illegally"  endorsed  and  the 
bonds  of  the  state  were  "unconstitutionally"  issued. 

§  8.  Although  Kentucky  engaged  to  a  limited  extent  very 
early  in  railway  construction,  she  did  not  keep  it  up  long,  and 
as  early  as  1843  preferred  to  lease  the  Lexington  and  Ohio  Rail- 
road to  private  persons.^     The  aid  granted   in    Kentucky   seems 

'Acts  of  Louisiana,  187 1,  p.  211  et  seq. 

^Poor's  Manual  of  Railroads,  1871-72,  p.  591. 

^Ibid.,  1873-4,  P-  720.  '^Ibid.,  1873,  p.  30. 

^  Ibid.,  1874,  p.  41 ;  also  Poor's  Manual  of  Railroads,  1881,  p.  880. 

*'  Acts  of  Kentucky,  1843,  P-   369. 


INTERNAL-IMPROVEMENT    EXPERIMENTS  21  5 

to  have  been  granted  rather  by  counties  than  by  the  state.'  In 
1868  (October  lo)  the  state  possessed  stock  in  banking,  railway 
and  turnpike  companies  to  the  amount  of  ;^6, 122,794.^  But  the 
debt  of  Kentucky  and  especially  the  railroad  debt  was  never  a 
burden  because  it  never  grew  very  large. 

§  9.  While  other  states  in  the  early  period  from  1837-40 
engaged  in  aiding  railways  and  canals  and  frequently  banking 
institutions  also,  Alabama  confined  her  efforts  to  the  aid  of  banks 
and  did  not  begin  aiding  railways  till  about  1850.  The  first 
assistance  rendered  by  the  state  to  railways  was  in  the  form  of  a 
direct  grant  of  a  portion  of  the  "Two  Per  Cent.  Fund"  and 
"  Three  Per  Cent.  Fund  "  of  the  state. 3  There  was  not,  however, 
very  much  activity  for  several  years  in  aiding  railways.  Further 
grants  of  the  "  Two  Per  Cent.  Fund  "  were  made  later  and  one 
or  two  direct  loans  made  to  railways.  In  1861  the  state  had  to 
foreclose  a  lien  on  one  road  to  which  bonds  had  been  granted.^ 
Very  little  was  done  during  the  war,  although  one  further  grant 
from  the  "Two  Per  Cent.  Fund"  was  made.^  The  first  general 
law  in  the  matter  of  aiding  railways  was  not  passed  till  Febru- 
ary 19,  1867.^  This  law  established  a  system  of  internal 
improvements  for  the  state ;  it  authorized  the  governor  to 
endorse  the  bonds  of  the  various  companies  at  the  rate  of  $12,- 
000  per  mile  as  often  as  a  division  of  twenty  miles  was  com- 
pleted.^  In  a  short  time  the  state  grew  more  daring  and  the 
legislature  authorized  the  governor  (February  11,  1870)  to  issue 
the  direct  bonds  of  the  state  to  the  extent  of  two  million  dollars 
for  the  benefit  of   the  Alabama  and  Chattanooga  Railroad.^     At 

^Acts  of  Kentucky,  1843,  p.  369  on. 

^Poor's  Manual  of  Railroads,  1 87 1 -2,  p.  581. 

3 For  a  description  of  these  "Funds,"  which  were  the  same  in  Alabama  as  in 
Missouri,  see  above,  chap,  i;  also  Acts  of  Alabama,  1851-2,  p.  209;  ibid.,  1853-4, 
p.  280. 

^  Acts  of  Alabama,  p.  81  ;  &\&o  Acts  of  Called  Session,  1861,  p.  l8l. 

^Acts  of  Alabama,  1863,  p.  142. 

^ Ibid.,  1866-7,  P-  686;  for  general  law  authorizing  counties  to  grant  aid,  see  Ibid., 
1868,  p.  514. 

T Ibid.,  1868,  pp.  17  and  201.  ^  Ibid.,  1869-70,  p.  89. 


2l6  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

the  same  session  the  law  of  1868  was  reenacted  and  some  of  the 
provisions  made  broader.'  The  legislature  also  released  the 
Tennessee  and  Coosa  Railroad  from  the  lien  held  by  the  state 
because  the  company  had  suffered  greatly  on  account  of  the 
war.''  During  1870  the  Alabama  and  Chattanooga  defaulted  in 
the  payment  of  interest  and  the  state  had  to  provide  for  the 
loan  to  pay  interest  on  her  bonds  loaned  to  the  company  and  on 
those  of  the  company  endorsed  by  the  state, 3  and  during  this 
year  only  one  further  grant  was  made.''  But  after  that  year, 
because  of  the  inability  of  the  companies  to  perform  the  tasks 
they  had  set  for  themselves  and  because  of  the  growing  indebt- 
edness, the  state  began  to  face  about  and  march  in  the  opposite 
direction.  The  railroad  debt  of  the  state  amounted  (October  i, 
1870)  to  $8,480,000  and  this  debt  grew  rapidly  till  October  i, 
1875,  when  it  amounted  in  endorsed  and  guaranteed  bonds  to 
;^i  5,797,000,  making  the  whole  debt  of  the  state  $30,037,563.5 
By  1873  default  had  been  made  upon  nearly  all  the  bonds  loaned 
to  the  companies  and  the  legislature  had  to  take  measures  "to 
maintain  the  credit  of  the  state. "^ 

As  early  as  187 1-2  an  act  provided  that,  in  case  of  the  una- 
voidable sale  of  any  of  the  railroads,  the  governor  should  have 
the  power  to  buy  them  in  for  the  state  at  the  amount  of  the 
bonds  loaned  so  as  to  make  the  state  secure. ^  An  act  of  1873 
provided  that,  in  case  the  roads  were  sold  the  purchasers  were 
to  be  constituted  a  "body  politic  and  corporate"  and  so  inde- 
pendently to  manage  the  railways.^  This  act  clearly  indicates 
that  the  state  contemplated  severing  her  connection  with  the 
railways;  and  this  policy  is  emphasized  in  an  act  of  March  17, 
1875,  repealing  the  act  of  February  21,  1870,  which  had  been 
passed  "  tp  furnish  the  aid  and  credit  of  the  state  of  Alabama 
for  the   purpose   of  aiding   the   construction  of  railroads  within 

^  Acts  of  Alabama,  pp.  157  and  285.  ''Ibid.,  p.  290. 

^  Ibid.,  1870-1,   p.  12;  also  Poor's  Manual  of  Railroads,  1871-7,  pp.  Sl^-ll- 

^  Acts  of  Alabama,  1869-70,  p.  376. 

3  Poor's  Manual  of  Railroads,  1872-3,  p.  699,  1873-4,  p.  714  and  1875-6,  p.  885. 

^Ibid.,  1873-4,  P-  713- 

T  Acts  of  Alabama,  1871-2,  p.  43.  ^ Ibid.,  l873,p.  57. 


INTERNAL-IMPROVEMENT    EXPERIMENTS  21/ 

the  state."  '  It  is  not  necessary  to  make  a  resume  of  the  repu- 
diating measures  by  which  the  state  of  Alabama  scaled  down 
her  debt  from  something  over  30  million  dollars  in  1875  ^^  less 
than  ten  million  in  1877.  The  debt  of  the  state  (October  i,  1877) 
was  only  $g,yo^,6'j%,  of  which  only  $1,542,500  is  put  down  as 
due  to  aiding  railroads.-  Such  was  the  outcome  of  aiding  rail- 
ways in  Alabama.  And  the  constitution  adopted  in  1875  pro- 
vides that  "no  new  debt  ....  except  to  repel  invasion  or' 
suppress  insurrection  shall  be  created." ^ 

§  10.  In  1868  Arkansas  had  outstanding  about  1.5  million 
dollars  in  bonds  in  favor  of  the  State  Bank  and  the  Real  Estate 
Bank,  both  of  which  were  insolvent  and  in  liquidation.  These 
bonds  were  overdue  and  no  interest  had  been  paid  on  them  for 
more  than  twenty  years. '^  Two  years  later  the  state  undertook 
to  aid  about  800  miles  of  railway  to  the  amount  of  $IO,000 
per  mile  on  roads  which  had  received  land  grants  and  $15,000 
per  mile  on  roads  which  had  received  no  land  grants. ^  By  the 
act  of  July  21,  1868,  the  number  of  miles  to  be  aided  was  limited 
to  800  and  the  bonds  to  be  granted  to  ten  million  dollars. 
But  the  Cairo  and  Fulton  Railroad  decided  not  to  avail  itself  of 
the  grant  of  bonds  ;  by  this  action  on  the  part  of  this  company 
the  number  of  miles  to  be  aided  was  brought  down  to  580  and 
the  amount  of  bonds  to  be  issued  to  not  more  than  6.3  million 
dollars.  In  April  1871  the  railroad  debt  outstanding  was  only 
$2,150,000;°  July  1872  the  bonds  authorized  to  be  issued 
amounted  to  11.4  million  dollars  and  bonds  issued  to  date  to 
$4,350,000.  The  total  debt  of  the  state  was  $9,885,000  and  the 
state  was  in  default  of   interest  on  all  of  it.^     Up  to  February  9, 

^  Acts  of  Alabama,  1875,  p.  269.  *  Poor's  Manual  of  Railroads,  1868,  p.  436. 

^  Voor's,  Manual  of  Railroads,  1878,  p.  993.  ^  Ibid.,  1870-1,  p.  500. 

^  Ads  of  Alabama,  1875,  P-  29.  ?  Poor's  Manual  of  Railroads,  1873-4,  p.  714. 

*            To  the  Memphis  and  Little  Rock  Railroad    -  -     $1,050,000 

"     "     Little  Rock  and  Fort  Smith      "               -  900,000 

"     "     Pine  Bluff  and  New  Orleans     "          -  -          750,000 

"     "     Mississippi,  Anachita  and  Red  River  "   -  450,000 


^2,150,000 


2l8  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

1874,  $5,350,000  in  state  bonds  had  been  issued  to  railroad  com- 
panies' and  these  companies  had  all  defaulted  after  the  payment 
of  interest  October  i,  1872.  The  legislature  of  that  year  made 
no  provision  for  the  })ayment  of  interest  and  the  enforcement  of 
the  law  requiring  the  earnings  of  the  roads  to  be  paid  into  the 
treasury  of  the  state  in  case  the  roads  yielded  no  more  than 
enough  to  pay  operating  expenses.  Such  was  now  the  case  and 
such  was  likely  "to  be  the  case  for  some  time  to  come."^  The 
session  of  the  legislature  of  1875-6  repudiated  the  debt  of  the 
state  incurred  for  aiding  railroads,  levees,  and  internal  improve- 
ments 3  on  the  ground  that  the  debt  was  created  by  "alien  adven- 
turers ; "  and  at  the  time  of  the  repudiation  only  one  road,  the 
Memphis  and  Little  Rock,  130  miles  in  length,  was  completed.'* 
By  1878  another  road,  the  Little  Rock  and  Fort  Smith,  receiv- 
ing state  aid  was  completed. ^ 

'Grants  of  land  were  made  as  early  as  1852  {Acts  of  Arkansas,  1852,  p.  4)  and 
some  were  made  in  1855  {Acts,  1855,  pp.  149,  169  and  172).  In  1859  #40,000  in  stock 
was  taken  in  the  Mississippi,  Anachita  and  Red  River  Railroad  {Acts,  1859,  p.  56).  In 
1861  ^100,000  were  appropriated  for  the  help  of  the  Memphis  and  Little  Rock  {Acts, 
1861,  p.  136).  A  general  law  governing  the  granting  of  aid  passed  March  18,  1867. 
The  railway  companies  were  to  provide  funds  "  ample  to  prepare  the  entire  road  or 
100  consecutive  miles  thereof  for  the  iron  rails  before  getting  any  aid  from  the  state 
{Acts,  1867,  p.  428).  A  further  act  for  aiding  railways  was  passed  in  1868  {Acts,  1868, 
p.  148).  By  the  terms  of  this  act  the  bonds  of  the  state  were  granted  at  the  rate  of 
$15,000  per  mile  to  railroads  not  having  land  grants,  and  #5000  per  mile  to  those  hav- 
ing land  grants  (Acts,  1868-9,  PP-  2  and  187).  An  act  of  February  10,  1869,  provided 
that  the  state  should  pay  the  interest  on  bonds  issued  to  the  railroads,  but  also  that  the 
state  levy  a  tax  on  the  railroads  heavy  enough  to  reimburse  the  state  {Acts,  1868-9,  P- 
147).  A  general  act  of  April  29,  1873,  provided  for  the  issuing  of  bonds  by  counties, 
cities  and  towns  for  the  purpose  of  aiding  railroads  {Acts,  1873,  P-  473)-  The  act  of 
April  10,  1869,  providing  for  the  payment  of  interest  on  bonds  issued  to  railroad  com- 
panies was  repealed  May  29,  1874  {Acts,  1874,  p.  38).  Lands  were  granted  to  several 
railroad  companies  in  1875  {Acts,  1875,  passim).  From  this  time  on  Arkansas  was  no 
longer  interested  in  railroads  from  an  industrial  point  of  view. 

'See  letter  from  the  Treasurer  of  the  state  of  Arkansas,  February  9,  1874,  in 
Poor's  Manual  of  Railroads,  1874-5,  P-  795- 

3  For  Railroads      -         -  .         #5,350,000 

"     Levees  ....       3,005,846 

"     Internal  Improvements  -  3,350,000 

11,705,846 

*  Poor's  Manual  of  Railroads,  1875-6,  p.  826,  and  1879,  P-  1003. 

^ Ibid.,  1878,  p.  994. 


INTERNAL-IMPROVEMENT    EXPERIMENTS  219 

^11.  In  Texas  the  earliest  aid  granted  to  railways  was  in 
the  form  of  land  grants.  In  an  act  of  January  30,  1854,  the 
state  granted  to  all  the  companies  then  organized,  or  to  be 
organized,  sixteen  sections  of  land  for  every  mile  of  railway 
completed.'  Such  aid  in  so  undeveloped  a  state  was,  however, 
practically  no  aid  at  all.  By  1870,  as  so  little  had  been  accom- 
plished up  to  that  time,  it  was  felt  that  the  state  must  adopt  a 
more  aggressive  policy.  Aid  was  granted  to  the  prospective 
International  Railway,  running  from  near  Fulton  in  Arkansas, 
passing  through  the  cities  of  Austin,  San  Antonio  to  the  Rio 
Grande  near  Laredo,  at  the  rate  of  $10,000  per  mile  in  8  per 
cent,  thirty-year  bonds  of  the  state.  The  act  also  limited  the 
amount  of  aid  to  be  granted  at  any  one  time  to  the  sum  of 
12  million  dollars.-  This  generosity  of  the  state  did  not, 
however,  call  forth  a  quick  response  on  the  part  of  private  capi- 
tal, and  did  not  result  in  securing  railways  for  the  state.  During 
the  same  year  the  state  exchanged  the  debt  held  against  the 
Houston  and  Texas  Central  Railway  for  stock  in  the  company  ;3 
and  in  the  following  year  the  governor  was  authorized  to  dispose 
of  the  Houston  and  Brazoria  Railroad,  then  in  the  possession  of 
the  state  for  "not  less  than  the  actual  value  of  the  iron  on  the 
track. "'^  The  railway  debt  increased  gradually,  however,  for  a 
few  years.  September  i,  1872,  the  debt  amounted  to  $2,173,- 
278.  A  little  more  than  two  years  later  (January  i,  1875)  ^t 
amounted  to  $4,822,000.  In  1873,  1874  and  1875  the  state 
made  further  grants  of  land  for  aiding  railways. s  The  people  of 
the  state  seem  to  have  been  convinced  at  an  early  date,  however, 
that  the  aiding  of  railways  by  means  of  state  bonds  was  an 
undesirable  form  of  state  activity.  It  is  to  be  noted  that  the 
state  became  involved  in  more  or  less  litigation  because  of  loaning 
funds   to   the    railways.^      Adopting  the  same  line  of  action  fol- 

'  Laws  of  Texas,  1853-4,  p.  1 1. 

""  Ibid.,  1870,  p.  104;  also  Poor's  Manual  of  Railroads,    1871-2,  p.  581. 
3  Latvs  of  Texas,  1870,  p.  325.  '^  Ibid.,  1871,  p.  158. 

-^Ibid.,  1873,  pp.  406,  555  ;  Ibid.,  1874,  pp.  36,  38,  46,  57,  74.  83,  93  ;  Laws,   1875, 
pp.  16,  19. 

^Ibid.,  1875,  p.  58. 


220  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

lowed  by  many  older  states  at  this  time  and  by  some  at  earlier 
times,  the  people  of  Texas  inserted  into  the  constitution  adopted 
in  1875  ^  clause  to  the  effect  that  the  legislature  was  prohibited 
from  "  giving  or  lending  the  credit  of  the  state  in  aid  of  or  to 
any  person,  association  or  corporation,  whether  municipal  or 
other  (sic)."'  A  few  years  later  (1882)  the  laws  granting  the 
land  to  railway  companies  were  repealed.^  This  closed  in  Texas 
the  experiment  of  aiding  railways. 

§12.  The  experiment  of  aiding  railways  in  Florida  never 
attained  great  proportions.  The  proceeds  from  the  sales  of  land 
granted  by  Congress  to  the  state  upon  the  admission  of  the  state 
into  the  Union  (March  3,  1845)3  were  applied  by  the  state  to 
the  payment  of  interest  on  the  bonds  of  railroad  companies. 
The  companies  were  authorized  ten  years  later  to  issue  bonds  at 
the  rate  of  $10,000  per  mile.'*  This  act  was  slightly  changed 
soon  afterwards  by  amendment. 5  In  1858  the  legislature  resolved 
to  ask  Congress  for  a  grant  of  lands  for  railroad  purposes.^  In 
1869  the  direct  bonds  of  the  state  were  substituted  for  the  bonds 
of  certain  railways. ^  In  1870  the  bonds  of  the  state  to  the 
amount  of  $16,000  per  mile  were  granted  to  the  Jacksonville, 
Pensacola  and  Mobile  Railroad  Company  ;  $200,000  to  the  Gulf 
Steam  Ship  Company  for  the  purpose  of  improving  the  channel 
of  the  Apalachicola  River ;  and  $8000  per  mile  to  the  Santa 
Rosa  Railroad,  Banking  and  Insurance  Company  to  assist  in 
building  a  railroad  not  more  than  fifty-five  miles  in  length,  and 
$2000  per  mile  bonus  to  this  company  after  the  road  should  be 
completed.*  In  a  short  time  four  million  dollars  of  the  bonds  of 
the  state  were  delivered  conditionally  to  the  Jacksonville,  Pensa- 
cola and  Mobile  Railroad  Company.  But  in  1871  none  of  these 
bonds  had  been  sold,  and  negotiations  were  pending  for  returning 

^  Revised  Statutes  of  Texas,  1879,  p.  7. 

^  Laws  of  Texas,  1882,  p.  3. 

3  United  States  Statutes  at  Large,  vol.  v.  p.  789. 

^ Laws  of  Florida,  1855,  pp.  26-27. 

'SJbid.,  1856,  p.  26.  1  Ibid.,  1869,  p.  36. 

*'Ibid.,  1868,  p.  187.  ^ Ibid.,  1870,  pp.  10  and  60-66. 


INTERNAL-IMPROVEMENT    EXPERIMENTS  22  1 

them  to  the  state.'  In  1 874  the  road  just  mentioned  was  operated 
by  the  receiver  for  the  benefit  of  the  state, ^  and  after  1870  no  fur- 
ther direct  aid  was  given  to  the  railroads  through  the  agency  of 
the  credit  of  the  state.  As  late  as  1881  and  during  that  year 
lands  were  granted  to  thirteen  separate  railroad  and  canal  com- 
panies.3  Also  in  1883  and  in  1885  land  grants  were  made  to 
many  companies.  But  the  close  of  state  aid,  as  an  internal- 
improvement  experiment,  had  long  since  come  to  an  end  in 
Florida. 

'Poor's  Manual  of  Railroads,  1871-2,  p.   579. 

^Ibid.,  1875-6,  p.  828. 

^  Laws  of  Florida,  pp.  126-155. 


CHAPTER  VII. 

SUMMARY  AND  CONCLUSION. 

§  I.  The  causes  for  the  failure  of  the  state  experiments  just 
reviewed,  as  well  as  those  of  earlier  date,  are  not  far  to  seek. 
They  are  two  in  number,  (i)  Incompetency  and  (2)  Corrup- 
tion. If  it  be  objected  that  the  most  competent  management 
could  not  have  succeeded  in  the  enterprises  of  many  of  the  states 
because  of  the  times  in  which  they  fell,  it  must  be  answered  that 
the  state  governments  did  not  at  the  beginning  of  these  enter- 
prises keep  in  mind  a  proper  relation  between  liabilities  incurred 
and  the  resources  for  meeting  these  liabilities.  Such  a  mistake 
is  the  indisputable  evidence  of  incompetency.  Such  being  the 
case,  when  crises  came  the  enterprises  were  doomed  to  such  sig- 
nal failures  and  the  states  made  to  suffer  such  losses  as  would 
never  have  taken  place  had  a  competent  management  at  the 
beginning  caused  a  more  rational  ratio  between  liabilities  and 
resources  to  be  adopted.  That  incompetency  and  corruption 
may  be  seen  to  be  the  cause  of  most  of  the  failures  in  those 
states  aiding  railways  on  a  large  scale  from  1837  to  1840  but 
little  need  be  said  here  in  addition  to  what  has  already  been 
given.'  In  the  case  of  the  three  greatest  experiments  of  the  earlier 
period  (i 837-1 840),  those  of  Indiana,  Illinois  and  Michigan, 
which  were  practically  contemporaneous,  that  form  of  incom- 
petency which  has  just  been  mentioned  showed  itself  in  an  aggra- 
vated degree.  In  not  one  of  these  states  did  the  authorities 
have  due  regard  to  the  possibilities  of  the  state  to  carry  burdens. 
And  with  reference  to  Illinois  there  can  be  no  doubt  that  political 
jobbery  played  no  small  part  in  the  experiment.  That  the  plan 
was  conceived  and  executed  by  incompetent  management  is  plain 
from  the  magnitude  of  the  debt  incurred,  the  early  failure  of  the 

'  See  above,  chapter  i. 

222 


SUMMARY    AND    CONCLUSION  223 

system,  and  the  subsequent  hasty  action  of  the  legislature  to 
undo  the  acts  of  only  three  years  previous.'  Nor  did  the  state, 
after  the  people  became  conscious  of  what  an  enormous  debt  had 
been  incurred,  immediately  accept  the  debt  without  some  talk  of 
repudiation.  In  1841  both  the  Whigs  and  the  Democrats  were 
unwilling  to  commit  themselves  on  the  question  of  repudiation. 
The  Sangamon  jfoiirnal  and  the  Alton  Telegraph,  the  two  leading 
Whig  papers  in  the  state,  boldly  took  the  ground  that  the  debt 
of  the  state  "never  could  and  never  would  be  paid,  and  there 
was  no  use  saying  anything  about  it."^ 

In  Indiana  the  negotiation  of  the  railway  bonds  was  effected 
by  a  system  in  which  there  was  the  "most  fearful  jobbing,"  and 
which  "resulted  in  serious  losses  to  the  state." ^  Because  of  the 
connection  of  the  internal-improvement  system  of  Indiana  with 
her  unsound  banking  system  further  losses  were  sustained  by  the 
state.  One  of  the  fund  commissioners  whose  duty  it  was  to  sell 
the  bonds  of  the  state  to  the  best  advantage  possible  was  one  of 
the  largest  stockholders  in  the  two  banks,  and  one  whaling  (sic) 
company,  through  which  the  bonds  were  negotiated.  In  this 
transaction  the  state  lost  ^2, 275, 000.  Further  losses  were  trace- 
able to  the  perfidious  conduct  of  this  particular  fund  commis- 
sioner.3 

Although  Michigan  disposed  of  her  railways  when  only 
partly  built  and  on  better  terms  than  any  other  state,  the 
attempt  to  construct  railways  upon  capital  borrowed  at  that  time 
(1837)  w^s  not  wise.  Moreover,  in  the  discussion  of  the  failure 
of  the  experiment  in  Michigan  it  is  to  be  taken  into  account 
that  "  some  of  the  leading  and  influential  men  of  the  state,  as 
subsequently  transpired,  were  in  the  interests  of  those  large 
moneyed  institutions  on  the  seaboard  that  sought  to  procure 
on  time  the  obligations  of  sovereign  states  with  which  to  prop 
their  own  tottering  credit  abroad.  It  would  not  have  been 
difficult  to  show  a  conspiracy  on  the   part   of  several   moneyed 

'  See  above,  chapter  i. 

^Davidson  and  Stuve,  History  of  Illinois,  p.  453. 

3  Hunt's  Merchants'  Magazine,  xxi.  p.  152. 


224  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

concerns  to  procure  the  obligations  of  the  state  for  their  own 
purposes."  '  And,  again,  the  results  of  this  experiment  must  be 
taken  into  account  because  it  resulted  in  leaving  upon  the  state 
the  odium  that  attaches  to  repudiation.  All  attempts  to  deny 
this  are  futile.  It  is  said  Michigan  "has  never  repudiated," 
though  her  position  "  has  been  too  equivocal."  The  defense  is 
this :  the  state  did  not  get  all  of  the  amount  for  which  her 
bonds  were  sold ;  she  acknowledged  and  paid  with  interest 
all  that  had  been  received  on  the  sale  of  bonds,  therefore  Mich- 
igan has  not  repudiated.^  This  line  of  argument  will  not  do. 
Innocent  parties  held  the  bonds  of  the  state  for  which  they  had 
paid,  but,  to  be  sure,  for  which  the  state  never  received  an 
equivalent. 3  These  parties  were  cut  out  by  the  final  settlement, 
therefore  the  state  did  repudiate. 

The  attempt  of  the  state  of  Pennsylvania  to  construct  and 
operate  a  system  of  public  works  also  proved  a  failure  through 
incompetency  and  corruption.  It  has  already  been  seen^  that 
the  system  of  public  works  in  Pennsylvania  was  "  conceived 
without  judgment  and  executed  without  skill,"  that  they  were 
laid  out  with  a  view  to  "  benefit  private  lands,"  and  that  private 
routes  of  transportation  were  so  much  better  conceived  that  they 
"naturally  drew  business  from  the  state  lines."  That  the  state, 
through  her  industrial  enterprises,  lost  her  financial  honor  is 
simply  a  matter  of  history. ^  That  unfortunate  position  of  the 
state  grew  out  of  "three  radical  errors  ;  (i)  government  system 
of  internal  improvements;  (2)  unsound  financial  legislation; 
(3)  a  corrupt  connection  with  a  rotten  banking  system."  "^  On 
some  of  her  canal  enterprises  "the  contracts  were  political  jobs 
shamefully  performed  for  enormous  sums  so  that  reconstruction 
and  repairs"  in  course  of  a  short  time  "amounted  to  more  than 
the  original    cost."^     Concerning    political    corruption    in    con- 

'  Hunt's  Merchants'  Magazine,  xxii.  p.  34.  ^ Ibid.,  xix.  p.  23. 

3  See  also  Scott,  Repudiation  of  State  Debts,  pp    161-164. 

^  Chapter  i.  p.  19. 

s  Worthington,  Historical  Sketch  of  the  Finances  of  Pennsylvania,  p. 50- 

'  ilnr\V&  Merchants^  Magazine,  xx.  p.  256. 

T  Ibid.,  p.  258. 


SUMMARY    AND    CONCLUSION  22  5 

nection  with  the  system  of  public  works  in  Pennsylvania,  it  is 
said  that  there  is  "every  reason  to  believe"  that  these  works, 
"during  the  last  sixteen  years  of  their  history,  were  maintained 
as  an  instrument  of  political  corruption  which  was  invaluable  to 
the  political  party  in  power."  ^ 

Whether  or  not  there  was  much  corruption  in  connection 
with  the  internal-improvement  enterprise  in  New  York  the 
change  of  policy  introduced  in  1836,  after  success  had  crowned 
the  efforts  of  the  state,  was  the  result  of  incompetency  in  indus- 
trial management.  At  that  time  the  seeds  of  final  failure  for 
the  enterprise  of  the  state  were  sown.  The  failure  of  man\'  of 
the  banks  of  the  state  in  1841  brought  the  state  government  to 
the  end  of  its  "wild-cat"  policy.  Between  1 839-1 841  many 
railroad  bonds  were  sold  "regardless  of  law  and  of  price. "^ 

§  2.  The  state  experiments  just  referred  to  constitute  prac- 
tically all  the  important  experiments  which  had  run  their  full 
course  prior  to  the  Civil  War  ;  some  of  these  states,  to  be  sure, 
had  completed  their  experiments  several  years  before  the  break- 
ing out  of  the  war.  The  experiments  in  many  other  states,  we 
have  seen,  were  begun  some  years  prior  to  the  war  and  had  not 
proceeded  in  their  course  far  enough  to  be  called  successes  or 
failures  at  the  time  of  the  breaking  out  of  the  war.  Concerning 
these  the  question  arises  what  might  they  have  done  had  not  the 
war  interrupted  their  progress.  Of  these  experiments  that  of 
Missouri  is  the  most  important  from  one  point  at  least  —  it 
involved  the  state  in  a  larger  debt  than  did  that  of  any  other. 
In  discussing  the  possibilities  of  the  ultimate  success  of  these 
experiments,  and  especially  that  of  Missouri,  two  things  must  be 
kept  in  mind  :  (i)  The  nature  of  railway  management ;  (2)  the 
qualifications  the  state  governments  possessed  for  meeting  the 
demands  of  that  sort  of  management.  In  the  first  place  the 
managing  of  railways  is  strictly  an  industrial  business,  one  that 
requires   special  training  in  scores    of    different    ways,   peculiar 

'  Worthington,  Historical  Sketch  of  the  Finances  of  Pennsylvania,  p.  32. 
"  Hunt's  Merchants'  Alagazine,  xviii.  p.  248. 


2  26  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

business  insight,  a  knowledge  of  markets,  home  and  foreign,  and 
the  products  of  different  sections  to  be  permeated  by  connecting 
railway  systems,  and  a  knowledge,  too,  of  the  habits,  fashions 
and  caprices  of  society.  This  being  the  case  the  pertinent 
question  arises,  could  the  state  governments  in  the  cases  in  hand 
have  supplied  the  demand  ?  Had  any  state  prior  to  the  war 
succeeded  in  supplying  this  demand  ?  Plainly  not.  All  had 
failed.  We  have  seen  that  private  parties  laid  out  better  lines 
of  railways  in  Pennsylvania  than  the  state  government  did. 
Private  enterprise  outran  public  activity  in  Massachusetts.  Soon 
after  the  failures  of  Illinois,  Michigan,  Indiana,  Ohio  and  other 
states  private  enterprise  set  to  work  and  built  railways  which 
proved  to  be  profitable  investments.  Had  not  the  war  inter- 
rupted possibly  some  of  the  states  would  have  brought  their 
enterprise  to  completion  in  a  desirable  form.  However,  as  a 
matter  of  fact  all  the  states,  those  interrupted  by  the  war  and 
those  entering  into  internal-improvement  undertakings  after  the 
war,  sooner  or  later  gave  up  the  business  as  unprofitable.  And 
so  far  as  Missouri  is  concerned  it  has  been  seen  in  the  account 
of  her  experiment  that  no  small  amount  of  incompetency  crept 
in  and  a  style  of  political  corruption  was  developed  which  made 
that  of  other  states,  so  far  as  brought  to  light,  pale  into  insig 
nificance.  This  corruption,  especially  that  which  is  brought  to 
light  in  connection  with  the  sale  of  the  Pacific  Railroad,  indicate 
the  presence  of  possibilities  for  cor^ruption  that  would  have 
made  the  continued  connection  of  the  state  with  railways  after 
the  war  a  most  hazardous  enterprise  for  the  state.  In  that  event 
it  was  certainly  more  profitable  for  the  state  to  dispose  of  the 
roads  for  what  they  would  bring,  even  if  this  must  be  done 
at  a  sacrifice  and  at  the  hands  of  corrupt  legislators. 

Moreover,  barring  all  possibility  of  corruption  a  further  con- 
sideration must  be  kept  in  mind  in  deciding  upon  the  feasibility 
of  the  continued  management  of  railways  after  the  war  by  the 
states  then  so  engaged.  The  same  consideration  holds  good  for 
those  states  which  entered  for  the  first  time  into  the  aiding  of 
railways   after  the   close   of  the  war.      In   many  sections  of  the 


SUMMARY    AND    CONCLUSION  227 

country  extensive  railway  systems  were  being  constructed  by 
private  enterprise.  Long  trunk  lines  would  soon  be  formed 
under  such  management.  The  management  of  state  enterprises 
would  thus  inevitably  be  brought  into  direct  competition  with 
private  management  on  private  railway  systems.  In  the  event 
of  such  a  course  of  things,  if  the  state  management  should  at 
all  resemble  that  of  earlier  times,  it  is  not  difificult  for  one  to 
decide  which  would,  in  the  long  run,  gain  the  victory. 

That  the  uncompleted  roads  in  Missouri  would  have  been 
completed  without  the  release  of  the  state's  liens  is  certainly 
true,  notwithstanding  the  fact  that  several  of  the  companies 
complained  greatly  from  time  to  time  that  the  liens  were  heavy 
burdens,  preventing  them  from  floating  bonds  of  their  own.  It 
is  impossible  as  one  reads  memorial  after  memorial  from  the 
North  Missouri  and  some  from  the  Pacific  (completed,  however, 
while  the  state  was  aiding)  to  escape  the  impression  that  these 
companies  wanted  release  from  liens  so  that,  by  virtue  of  that 
fact,  they  would  come  into  the  possession  of  great  values  for 
which  they  would  render  no  quid  pro  quo,  and  would  then,  if 
needed,  have  a  greater  basis  upon  which  to  build  credit.  This 
was  especially  the  case  with  the  North  Missouri.  If  the  state 
lifted  from  this  railway  property,  more  than  half  of  which  she 
had  contributed,  the  burden  of  securing  state  bonds,  of  course  the 
property  would  then  be  capable  of  serving  as  collateral  for  a  like 
sum  of  railway  bonds.  Consequently  releasing  the  liens  meant 
making  direct  gifts  to  the  companies  of  the  state's  interests  in 
the  roads,  and  we  have  seen  that  in  the  case  of  the  St.  Louis 
and  Iron  Mountain,  the  North  Missouri,  and  the  Platte  Country 
railroads  this  interest  was  very  much  greater  than  was  real- 
ized when  the  state  canceled  the  liens.  But  if  these  uncom- 
pleted roads  were  to  be  completed  with  the  liens  holding  against 
them,  the  state  must  do  the  work  or  wait  till  the  prospects  of 
profit  lured  private  capital  into  the  enterprise.  With  trade  and 
industry  developing  as  they  likely  would  after  the  close  of  the 
war  the  state  might  not  have  to  wait  long  for  the  prospects  of 
profit  to  entice  capital  into  the  work  of  completing  the  railways. 


228  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

This  plan  would  have  had,  however,  the  fault  of  indefiniteness 
and  the  interest  of  the  debt  of  the  state  would  have  been 
increasing  all  the  time.  The  state  could  not  do  the  work  for 
the  reason  that  an  increase  of  debt  would  have  been  necessary, 
and  the  railway  debt  with  interest  had  already  reached  more  than 
30  million  dollars,  the  constitutional  limit  of  debt  for  such  pur- 
poses; Consequently  the  state  was  limited  to  the  one  course  of 
disposing  of  the  roads  by  releasing  the  liens-.  In  such  a  case 
an  able  and  honest  legislature  would  have  made  as  favorable 
terms  for  the  state  as  possible.  As  it  was,  however,  the  state 
interests  were  sacrificed  to  the  extent  of  several  millions.  The 
greatest  sacrifice  was  that  of  nearly  six  million  dollars  on  the  Paci- 
fic Railroad  —  a  road  upon  which  the  lien  should  not  have  been 
released  because  it  was  already  a  completed  road  and  was  earn- 
ing handsome  dividends.  The  release  of  the  lien  on  the  Pacific 
was  accomplished  by  corruption  of  the  most  disreputable  sort. 
And  as  it  was  the  same  body  of  legislators  who  released  the 
liens  on  all  the  roads  we  may  say  that  the  state's  interests,  to 
the  extent  they  were  sacrificed,  were  sacrificed  by  unprincipled 
representatives  of  the  people.' 

§  3.  In  so  great  an  amount  of  state  activity  as  we  have 
reviewed  in  the  preceding  pages  it  is  pertinent  to  ask  if  there 
have  not  been  found  some  redeeming  features  along  with  so 
much  that  is  objectionable.  The  plans,  systems  or  policies  of 
state  aid,  as  such,  have  all  failed.  Out  of  these  wrecks  no  states 
but  Georgia  and  Illinois  have  saved  anything  in  the  form  of  a 
direct  and  possibly  perpetual  income  to  the  state  treasury.  To 
be  sure,  indirectly,  in  states  like  Pennsylvania  and  New  York 
especially,  and  many  more  in  general,  in  which  permanent  inter- 
nal  improvements  were    more   or   less  firmly  established  by  the 

'The  following  names  are  given  in  the  star-chamber  report  (see  Appendix  II.)  of 
the  committee  that  represented  the  Board  of  Directors  of  the  Pacific  Railroad  at 
Jefferson  City  in  the  winter  of  1868  and  secured  the  passage  of  the  act  of  March  31, 
1868,  releasing  the  lien  on  the  Pacific  Railroad  :  In  the  Senate,  Stephen  Ridgeley, 
J.  G.  Woerner,  H.  J.  Spaunhorst ;  in  the  House,  G.  C.  Van  Wagoner,  C.  H. 
Branscomb,  C.  R.  Smythe,  Norman  J.  Colman. 


SUMMARY    AND    CONCLUSION  229 

activity  of  the  state,  the  community  gets  a  valuable  income. 
And  yet  in  regard  to  the  question  as  to  whether  or  not  this 
income  is  greater  than  could  or  would  have  been  secured  by 
private  enterprise,  neither  the  advocates  of  state  activity  nor 
their  opponents  can  ever  make  a  satisfactory  answer.  The 
income  of  the  state  of  Georgia,  as  a  remnant  of  her  industrial 
activity  in  railway  matters,  is  in  the  form  of  a  month-rental  from 
the  Western  and  Atlantic  Railroad.  In  1890  (December  27)  the 
state  leased  this  road  to  the  Nashville,  Chattanooga  and  St. 
Louis  Railway  Company  for  twenty-nine  years  at  a  monthly 
rental  of  ;g3 5,001  or  ^420,012  per  year.'  As  the  state  pays, 
however,  the  annual  charge  of  S2 52,000  on  bonds  issued  in 
behalf  of  the  company,  the  gain  to  the  treasury  amounts  only 
to  Si 70,0 1 2  annually. 

In  Illinois  a  much  better  showing  is  made.  It  should 
be  said,  however,  that  the  gain  now  coming  to  the  state  of 
Illinois  from  the  Illinois  Central  Railway  is  not  a  remnant  of  the 
early  experiment  (i 837-1 840)  of  the  state  in  aiding  railways. 
This  income  arises  from  a  later  connection  of  the  state  with 
railway  matters.  The  income  to  the  state  is  in  the  form  of  a 
percentage  of  the  annual  earnings  of  the  Illinois  Central  Rail- 
way ;  this  company  pays  into  the  treasury  of  the  state,  in  addi- 
tion to  taxes,  7  per  cent,  of  the  gross  receipts  in  the  state  of 
Illinois.  The  receipts  in  1893  amounted  to  nearly  three-fourths 
of  one  million  dollars.^ 

§  4.  By  way  of  conclusion  the  writer  would  say  only  a  word 
on  the  general  question  of  state  activity  versus  private  enterprise 
in  railway  matters.  The  advocates  of  state  activity  in  railways 
and  in  like  industries  partaking  more  or  less  of  the  nature  of 
natural  monopolies  are  accustomed  to  refer  us  to  the  success  of 

■"Debt  of  Georgia"  in  Poor's  Manual  of  Railroads,  1879  and  succeeding  years; 
also  ibid.,  1891,  p.  991. 

""  1891  ....  $599,064 

1892  -----         645,905 

1893  ...  -  707,688 

Report  of  the  Railroad  and  Warehouse  Conunissioners,  1893,  pp.  40  and  no. 


230  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

the  governments  of  continental  Europe  in  these  matters.  It 
should  be  kept  in  mind,  however,  that  before  one  nation  should 
accept  and  adopt  fully  a  habit,  custom  or  institution  of  another, 
the  former  should  inquire  if  the  custom  or  institution  about  to 
be  adopted  is  or  is  not  in  accordance  with  the  genius  or  social 
instincts  and  inherited  tendencies  of  its  people.  Between  the 
countries  of  continental  Europe  and  the  United  States  of 
America  there  is  a  divergence  in  these  matters  as  wide  as  the 
East  is  from  the  West.  The  leading  peoples  of  continental 
Europe  from  the  time  they  began  to  assume  really  national  pro- 
portions, have  been  accustomed  to  more  or  less  strongly  cen- 
tralized governments  ;  they  have  inherited  a  deference  amount- 
ing to  reverence  for  authority.  Under  such  political  conditions 
those  in  public  office  are  in  immediate  subjection  to  authority. 
Such  an  arrangement  is  virtually  a  political  hierarchy ;  and  if 
applied  to  industry  it  becomes  an  industrial  hierarchy  and  works 
like  a  machine.  And  so,  because  of  the  exactness  with  which 
such  governments  as  those  of  the  continent  of  Europe  work,  be  the 
field  politics  or  industry,  maladministration  has  little  chance  to 
enter.  Whether  or  not  an  industrial  system  less  like  a  machine, 
a  system  in  which  there  is  more  of  individual  initiative,  such,  for 
instance,  as  is  found  in  Anglo-Saxon  countries,  is  productive  of 
more  good  to  society  as  a  whole  and  of  less  individual  ine- 
quality, is  an  open  question.  With  what  ought  to  be  or  what 
may  possibly  be  we  are  not  here  concerned  ;  we  are  concerned 
only  with  what  has  been.  The  facts  of  social  development  through 
centuries  among  Anglo-Saxon  peoples  prove  that  the  genius  of 
the  Anglo-Saxon  flourishes  best  under  a  system  in  which  the 
individual  is  given  the  largest  possible  freedom  consistent  with 
what  is  conceived  to  be  the  good  of  society.  However,  the  fore- 
going study  is  not  an  argument  for  or  against  state  activity  in 
industrial  matters ;  it  is  a  presentation  of  a  body  of  facts,  a  bit 
of  evidence,  to  be  taken  into  consideration,  possibly,  in  succeed- 
ing times,  in  the  discussion  of  the  question. 


APPENDIX  I. 


TABLES  RELATING  TO  RAILROADS    IN   MISSOURI. 


EXPLANATORY    NOTE. 

The  tables  are  compiled  from  the  reports  of  the  Board  of  Public  Works, 
and  from  communications  made  to  the  legislature  by  the  different  companies. 
These  reports  and  communications  are  found  in  the  appendices  of  the  House 
and  Senate  Journals  for  the  period  covered  by  the  tables.  The  amounts  in 
the  columns  are  the  totals  to  date  unless  otherwise  stated.  A  blank  means 
that  the  number  in  the  preceding  column  is  repeated. 

For  notes  to  tables  see  pages  238-242. 


231 


23: 


STATE    AID    TO    RAILWAYS    IN    MISSOURI 


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STATE    AID    TO    RAILWAYS    IN    MISSOURI 


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APPENDIX 


237 


TABLE  VI 
CAIRO  AND  FULTON  RAILROAD. 


State  bonds  authorized 

County  subscriptions 

Individual  subscriptions 

Total  subscriptions 

Total  subscriptions  paid 

Bonds  issued  to  the  company. 
Discount  on   bonds  sold 


Congressional  land  grants. 


County  land  grants 

Land  sales 

Funded  debt 

Floating  debt 

Annual  interest  due  to  state 

Total  interest,  discount  and  exchange 

charges 

Total  expenditures 


1857 
(Oct.  20.) 


$650,000 

419,500' 

842,275 

1,261,775 

415,918 

180,000 

20,000 

(acres) 

56,007 

370,820 


1858 
(Dec.  I.) 


180,000' 
4,000 


20,000 


^459,675 


464,593 
250,000 

32,172 


(acres) 
514,500 


$8,000 
15,000 

34,313 
420,366 


1859 
(Oct.  I.) 


$504,663 
650,000 
110,030 


none 
39,000 

138,810 
842,673 


1861 
(Jan.  I. 


TABLE  VII. 
PLATTE  COUNTY  RAILROAD. 


State  bonds  authorized 

County  subscriptions 

Individual  subscriptions 

Total  subscriptions 

Total  subscriptions  paid 

Bonds  issued 

Discount  on  bonds  sold 

F'unded  debt 

Floating  debt .^ 

Annual  interest  due  the  state 

Total    interest,    discount,    and    exchange 

charges 

Cost  of  road  per  mile 

Cost  of  rolling  stock  per  mile 

Total 

Total  expenditures 

Annual  receipts  for  transportation 

Annual  expenses  for  transportation 

Per  cent,  on  investment 


1856 
(Nov.  30.) 


$700,000 

1,255,800 

151,150 
150,000 
none 
150,000 
187,412 

not  given 


(cir.)25,ooo 
251,190 


1859 
(Oct.  15.) 


$175,000 


766,875 

700,000 

none 

28,981 
42,000 

not  given 


1,445,159 


1863 
(Jan.  I. 


809,125 


1,657,393 


'  This  company  defaulted  in  the  payment  of  interest  due  the  state,  July  i,  1861. 


238  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

REFERENCE  NOTES  TO  TABLES. 


TABLE  I. 
'  Of  this  amount,  ;5!795,ooo  was  cash ;  the  remainder  was  bonds. 
'  Premium  instead  of  discount. 
3  Exclusive  of  transportation  expenses. 

*  That  is,  1.5  per  cent,  on  the  cost  (i?i, 709,713)  of  the  first  division  (thirtv-seven 
miles).     This  includes    a    ballasted   roadbed,  fenced,  and   protected  by  cattle-guards. 

s  This  amount  includes  all  the  expenses  on  the  South  West  Branch  to  date,  and  the 
expenses  for  the  survey  of  the  Iron  Mountain  Road.  (Senate  Journal,  Adjourned  Ses- 
sion, iSjSy  Appendix,  p.  179.) 

*  Premium  and  discount  balance. 

7  The  floating  debt,  March  10,  1856,  was  ^1,337,828. 

®This  amount  covers  the  cash  cost  of  the  line  to  Jefferson  City  only.  It  includes 
rolling  stock,  depots,  water  stations,  ballasting,  fencing,  tools  and  machinery,  and 
land  damages.  In  the  report  of  the  following  year,  this  amount  was  increased  to 
;S6,577,266.  This  would  make  the  cost  per  mile  a  little  more  than  $44,171.  In  1858 
the  total  cost  to  Jefferson  City  was  put  at  $7,542,353. 

'See  note  8  above. 

'°  This  mcludes  all  interest,  discount,  and  exchange  charges,  $10,397  of  which  was 
on  account  of  the  South  West  Branch. 

"  On  the  cash  cost  to  Jefferson  City.  The  earnings  given  being  for  only  seven 
months  (ending  September  30,  1857),  the  annual  rate  would  be  5. 12  per  cent. 

'-After  1858,  all  figures  pertaining  to  the  South  West  Branch  are  omitted.  For 
these,  see  Table  II. 

'3  Number  of  acres,  1224.9. 

'"•On  the  cost  to  Jefferson  City;    see  also  note  8  above. 

'S  Net  discount. 

'*  Number  of  acres,  87,274. 

'7  From  St.  Louis  to  Syracuse. 

'*  The  state  paid  the  interest  due  by  the  company,  January  i,  i860. 

'9  This  includes: 

Per  Mile 
Cash  cost   of  grading,    masonry,   superstructure,  ballastmg,  and 

bridges -         .         .         -  $37,127.37 

Cash  cost  of  right  of  way  and  real  estate 2,121.80 

Cash  cost  of  fences  and  protection        -  -  -  -         -  -  901.97 

Cash  cost  of  buildings  and  machinery       -----  1,965.58 

Cash  cost  of  telegraph  line  -------  35-93 

Cash  cost  of  engineering  and  agencies     -----  1,695.00 


Total $43,847-65 

This  is  the  net  cost  of  the  road,  per   mile,  from   St.  Louis   to    Otterville,  176    miles. 
The  gross  cost  was  $53,700. 


APPENDIX  239 

^On  the  cost  to  Otterville ;  see  also  note  19  above. 

-'Net  cost  to  Sedalia,  189  miles  from  St.  Louis ;  the  gross  cost  is  $55,970. 

==»  Of  this  stock 

St.  Louis  county  held       ------         $1,104,000 

St.  Louis  city       -----...  500,000 

Johnston  county        .----..  150,000 

Jackson  county     --------  275,000 

Morgan  county         -------  i7,754 

Moniteau  county  --------  69,500 

Henry  county  --------  7,600 

Pettis  county          --------  102,400 

Cass  county       --------  1,500 

Individuals  -          -          -          -          -     ■    -          -          -          -  1,381,361 


Total -         -       $3,609,115 

—  Cf.  Appendix  to  House  and  Senate  Journals  {/86S),  p.  221. 
=3 The  interest  due  by  the  company  to  the  state  was  $3,780,000. 

^4  No  records  are  to  be  found  showing  exactly  what  the  total  expenditures  of  the 
company  were,  upon  the  completion  of  the  road.  Therefore  it  cannot  be  said  exactly 
what  the  average  cost  per  mile  of  the  whole  line  was.  The  average  cost  west  of 
Sedalia  would  naturally  fall  below  the  average  cost  east  of  this  place.  The  funded 
debt  and  other  liabilities  of  the  road,  at  the  time  of  its  completion,  were  $14,383,493. 
This  would  give  an  average  cost  of  $50,821  per  mile  for  the  whole  road  (283  miles). 

^5  On  the  entire  debt  oi  the  company. 


TABLE    IL 
'Subscription  by 

Greene  county        .--.-.--  $100,000 

Newton  county             -------  50,000 

Lawrence  county    --------  50,000 

Laclede  county  --------  30,000 

Jasper  county          --------  25,000 

Dade  county       -...---.  20,000 

Dallas  county         ..-...--  20,000 

Polk  county        --------  20,000 

Barry  county           --------  10,000 

$325,000 

Individuals             --------  44,400 

Contractors          --------  100,000 


$469,400 
— House  Journal  {Ktg\i\a.r  Session,  1855),  Appendix,  p.  49. 

-The  purchase  price  was  $1,209.50. 

3 Of  this   amount  $1,268,000  were  "direct"  bonds  of  the  state.     The   remainder 


240 


STATE    AID    TO    RAILWAYS    IN    MISSOURI 


were  the  bonds  of  the  company  "guaranteed"  by  the  state.     The  first  bore  6,  and  the 
last  7  per  cent,  interest. 

*  $200,000  additional  sevens  had  been  guaranteed  by  the  state. 

^ St'na/e /ournal  {Ad]ourned  Session,  1858-9),  Appendix,  p.  79. 

*For  nine  and  one-third  months,  ending  September  30,  1859. 

7  This  brought  $17,777.95. 

8  Road  defaulted  in  the  payment  of  interest,  July  i,  1861. 

5  This  is  the  average  cost  of  seventy-seven  miles  of  road  then  completed,  December 
22,  i860.  There  is  only  a  very  small  amount  of  rolling  stock  included ;  all  other 
items  of  railway  construction  are  included. 

'"Assuming  the  difference  between  the  total  expenditures  for  this  period  and  for 
i860  to  be  equal  to  the  cost  of  grading  west  of  Rolla,  we  would   have  the  cost  per 
mile  of  road  the  same  as  in  i860.     A  table  given  in  a  regular  report  of  the  company, 
however,  put  the  cost  of  the  road  to  Rolla  (stated  in  the  report  to  be  seventy-six  miles) 
as  follows  : 

Cash  cost  of  road  per  mile  ...  -       $33,959 

Interest,  discount,  exchange,  and  commission  -  20,953 

Rolling  stock  -  -  -  -  -  -  1,507 

Land-grant  expenses  .....        414 


Total 


$56,833 


TABLE  IIL 

'  Subscriptions  : 

I. 

By  counties 

Marion 

$100,000 

Livingston      .-..--.- 

26,000 

Buchanan              ....... 

100,000 

Daviess 

1,000 

2. 

By  the  city  of  Hannibal          ..... 

50,000 

3- 

By  individuals  in 

Shelby  county          ....... 

4,000 

Macon  county      - 

8,400 

Linn  county              ....._. 

8,300 

Livingston  county       .-..-- 

17,300 

Caldwell  county       ---.... 

5,900 

Grundy  county     --.---- 

1,400 

Daviess  county         ..--... 

3,100 

De  Kalb  county     -.----- 

300 

Clinton  county           .-.-... 

2,500 

Buchanan  county           ...--. 

29,500 

Boston  and  New  York  cities             .         .         .         . 

1,000,000 

By  J.  Duff  &  Co. 

27,800 

*The  whole  of  the  subscription  to  the  stock  was  $2,551,280. 

From  this  is  to  be 

APPENDIX  241 

deducted  the  amount  of  stock  canceled  by  a  resolution  of  the  Board  of  Directors,  as 

follows  : 

Individual  stock     ------  $1,000,000 

City  of  Hannibal        -----  60,000 

County  of  Livingston    -----  31,680 

Delinquent        ..-.-.  65,800 


$1,157,480 
Leaving 1,393,800 

3  This  includes  bonds  sold  : 

State  bonds       ------  $3,000,000 

Land  bonds  of  the  company            -         -  -       5,000,000 

Convertible       ------  447,000 


Total $8,447,000 

'•P^ormer  amount  corrected. 
SFor  $144,707. 

*Cash  cost  October  i,  1859,  for  the  whole  line  (208  miles)  $6,030,317.82. 
7  Smaller  than  in  1859  because  of  delinquencies. 
«  For  $352,188.40. 

9  This  includes  cost  of  rolling  stuck,  interest,  discount,  and  exchange  charges,  in 
addition  to  the  ordinary  expenses  of  construction.     The  cash  cost  was  $28,447. 

^°  As  estimated  at  this  date. 

"During  the  war  and  just  after  its  close  no  full  reports  were  made. 


TABLE  IV. 


'For  the  short  period  from  August  20  to  September  30,  1855. 

^Not  given  separately. 

3  All  of  this  discount  was  sustained  by  1250  bonds,  704  bonds  selling  at  par.  The 
lowest  price,  67^  cents,  for  the  bonds  of  this  road,  was  reached  September  30,  1857.— 
i/ouse  Journal  (Adiourned  Session,  1857),  pp.  48-49. 

'•Deficit  $19,476.  These  figures  include  all  expenses  for  transportation,  from  the 
beginning  up  to  date. 

s  Smaller  than  formerly  because  of  delinquencies. 

*  Defaulted  in  the  payment  of  interest,  January  i,  1859. 

7  Total  to  date. 

^  These  sums  extend  over  twenty-five  months  immediately  preceding  November 
1863. 

5 See  Senate  /ottrna/ {iSbj),  Appendix,  p.  881. 

"The  whole  expenses  given  were  $753,826,  but  $205,083  was  for  keeping  up  the 
roadway,  and  therefore  not  strictly  chargeable  to  running  expenses. — Jliid. 


242  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

TABLE  V. 

'  Made  up  as  follows  : 

Private  subscriptions  in  counties             ....  $243,300 

Madison  Iron  and  Mining  Company,  cash         -         -  50,000 

American  Iron  Mountain  Company,  cash       -         -         -  50,000 

American  Iron  Mountain  Company,  bonds         -         -  -      25,000 


Total  ..---.-      8368,300 

^  The  lowest  price  reached  was  bg}(  cents. 
3  Defaulted  in  the  payment  of  interest,  July  i,  1858. 
*FoT  eleven  months  prior  to  Nov.  30,  1858,  expenses  are  not  given. 
5  This  does  not  include  county  bonds. 

*This  was  the  gross  cost  of  the  road  per  mile.  The  length  of  the  road  is,  in  all, 
96  miles;  main  line,  86.5  ;  switches  and  branch,  9.5  miles.  The  cash  cost  was  $43,517 
per  mile. 

'This  sum  includes  the  cost  of  the  Potosi  Branch.     The  sum  for  1858  does  not. 

^Of  the  state  grant,  $99,000  was  forfeited  because  the  road  defaulted  in  the  pay- 
ment of  interest. 

"Total  to  date,  $931,770. 

'"For  a  period  of  twenty-five  months  immediately  preceding  January  i,  1863. 

"The  company  paid  $40,000  interest  this  year. 

'=  The  earnings  of  this  company  are  given  for  calendar  years  as  follows  : 


Gross  Earnings 

Expenses 

Net  Earnings 

1859  (11  months)         -         -     $222,574 

$167,659 

»   54,915 

i860      .        -        -        -          235,291 

175.853 

59.437 

1861           ....        212,945 

145,922 

67.023 

1862      ....           253,232 

187,976 

65,258 

1863         ....       420,911 

259,688 

161,223 

Journal  (Adjourned  Session,    1863-4),  par 

I    ii.,    pp.    750-/ 

'52.     N.  B.— These 

figures  do  not  correspond  to  those  in  the  table,  being  strictly  for  calendar  years,  while 
the  others  are  not. 

'3  Cf.  5V«i7/6' yi3«r«a/ (1867),  Appendix,  p.  880.     The  figures  on  this  page,  how- 
ever, are  general  estimates  and  are  therefore  not  meant  to  be  technically  exact. 


TABLE  VL 


'  The  following  subscriptions  were  made   by  counties  to  be  paid  in  lands  at  $1 
per  acre  : 

By  Stoddard  county         .  -  .  .         -      $150,000 

By  Butler  county         .  .         .         .         .  100,000 


Carried  forward,  $250,000 


APPENDIX  24 

Amount  brought  forward,  $250,000 
By  Dunklin  county  -  -  -         .  .         100,000 

By  Scott  county -       50,000 

By  Ripley  county 19,500 


;?4i9,5oo 

^  Since  this  item  is  not  generally  given,  only  the  amount  of  state  bonds  issued  to 
the  company  is  included. 

3  This  column  is  essentially  the  same  as  that  of   1859.     Nothing  reliable  is  to  be 
found  later. 


APPENDIX  II. 

BILL  OF  COMPLAINT  AND  DECREE  AGAINST  THE  COMMITTEE 

OF  THE  BOARD  OF  DIRECTORS  OF  THE  PACIFIC 

RAILROAD  COMPANY. 

United  States  of  America,  ) 

Eastern  Division  of  the  Eastern  Judicial    >■  ss. 
District  of  Missouri.  ) 

In  the  Circuit  Court  of  the  United  States 
In  and  for  the  Eastern  Division  of  said  District. 

Be  it  Remembered,  That  on  the  fourth  day  of  May,  a.d.  1868,  there  was 
filed  in  the  ofifice  of  the  Clerk  of  the  Circuit  Court  of  the  United  States,  for 
the  Eastern  Districts  of  Missouri,  a  certain  Bill  of' Complaint,  in  words  and 
figures  following,  to-wit : 

(  Bill  of  Complaint.  ) 

In  the  Circuit  Court  of  the  United  States  for  the  Districts  of  Missouri.  To 
the  Judges  of  the  Circuit  Court  of  the  United  States  for  the  Districts  of  Mis- 
souri. 

James  L.  Lamb,  a  citizen  of  the  State  of  Illinois,  and  Henry  F.  Vail, 
Solon  Humphreys  and  James  Purnett,  citizens  of  the  State  of  New  York, 
bring  this  their  bill  against  the  Pacific  Railroad,  a  corporation  incorporated 
under  the  laws  of  the  State  of  Missouri,  and  George  R.  Taylor,  Henry  L. 
Patterson,  Daniel  R.  Garrison,  Charles  H.  Peck,  James  H.  Lucas,  Oliver  A. 
Hart,  Joseph  Brown,  Robert  Barth,  George  H.  Rea,  Benjamin  Stickney, 
James  Harrison,  Timothy  B.  Edgar,  Hudson  E.  Bridge,  John  C.  Porter,  John 
M.  Cooper  and  Madison  Miller,  citizens  of  the  state  of  Missouri,  and,  there- 
upon, your  orators  complain  and  say  that  the  Legislature  of  the  state  of  Mis- 
souri did  by  act  of  the  General  Assembly  of  the  said  state,  approved  March 
1 2,  1 849,  entitled,  "  An  act  to  incorporate  the  Pacific  Railroad,"  and  by  an  act 
amendatory  thereof,  approved  March  ist,  1 851,  entitled  "An  act  to  amend 
the  act  entitled  'An  act  to  incorporate  the  Pacific  Railroad,'"  create  a  cor- 
poration by  the  name  of  the  Pacific  Railroad  for  the  construction  of  a  railroad 
from  the  city  of  St.  Louis  to  the  western  boundary  of  the  state  of  Missouri ; 
that  by  an  act  of  said  General  Assembly,  approved  February  22,  1851, 
entitled  "An  act  to  expedite  the  construction  of  the  Pacific  Railroad  and  of 

244 


APPENDIX  245 

the  Hannibal  and  St.  Joseph  Railroad,"  the  state  of  Missouri  provided  under 
certain  conditions  for  the  issuing  to  said  corporation  of  the  bonds  of  the  said 
state  to  a  large  amount  which  were  to  be  sold  by  said  company  and  the  pro- 
ceeds thereof  expended  in  the  construction  of  said  railroad  :  that  in  pursuance 
of  said  last  named  act  the  said  state  did  issue  to  said  corporation  bonds  of  said 
state  to  a  large  amount ;  that  by  said  act  it  was  provided  that  the  acceptance 
of  said  act  by  said  corporation  and  the  issuing  of  the  said  bonds  thereunder 
should  constitute  and  be  to  all  intents  and  purposes  a  mortgage  upon  the  road 
of  said  company  to  the  people  of  the  state  of  Missouri  for  the  purpose  of 
securing  the  payment  of  the  principal  and  interest  of  the  sums  of  money  for 
which  said  bonds  should  be  from  time  to  time  issued  and  accepted  as  afore- 
said:  that  prior  to  the  year  1864  divers  other  acts  of  the  said  General 
Assembly  of  the  said  state  were  from  time  to  time  passed  and  approved 
authorizing  further  issues  of  the  bonds  of  said  state  to  said  railroad  for  the 
furthering  of  the  construction  of  said  railroad  under  substantially  the  same 
conditions  and  the  payment  thereof  secured  in  the  same  manner  as  provided 
in  the  act  above  mentioned,  and  which  bonds  so  authorized  were  issued  by 
said  state  in  pursuance  of  said  acts  to  said  company  and  were  disposed  of  by 
said  company. 

Your  orators  further  show  that  prior  to  the  loth  day  of  February  1864  the 
bonds  of  the  state  so  issued  to  said  corporation  defendant  herein  amounted  to 
about  seven  millions  of  dollars,  but  that  the  said  corporation  had  expended 
all  the  money,  derived  from  the  sale  of  said  bonds  and  from  private,  county, 
and  municipal  subscriptions  and  loans,  upon  said  railroad,  and  had  completed 
the  same  no  further  than  the  town  of  Dresden  in  Pettis  county  in  said  state 
of  Missouri,  and  for  the  purpose  of  securing  the  completion  of  said  railroad 
the  General  Assembly  of  the  state  of  Missouri  passed  an  act  approved  Feb- 
ruary loth,  1864,  entitled  "An  act  for  the  extension  and  completion  of  the 
Pacific  Railroad  to  the  western  boundary  of  the  state  of  (sic)  Kansas  City  and 
the  North  Missouri  Railroad  to  the  Iowa  state  line  to  complete  the  South 
West  Branch  of  the  Pacific  Railroad  and  to  reduce  the  state  indebtedness," 
whereby  the  said  Pacific  Railroad  was  authorized,  in  order  to  furnish  it  the 
means  to  complete  said  railroad,  to  issue  not  more  than  one  thousand  five 
hundred  bonds  of  One  Thousand  Dollars  each,  bearing  interest  at  not  more 
than  seven  per  cent,  per  annum  and  having  four,  five  and  six  years  to  run  in 
equal  proportions,  which  bonds  were  to  be  secured  by  a  first  mortgage  on  the 
main  line  of  the  said  Pacific  Railroad,  west  of  Dresden,  and  that  the  state  of 
Missouri  for  the  object  and  the  said  amount  and  extent  thereby  relinquished 
her  first  lien  and  mortgage  and  right  of  forfeiture  upon  said  railroad  west  of 
Dresden,  retaining,  however,  a  second  lien  thereon. 

Your  orators  further  show  that  in  order  further  to  secure  the  payment  of 
said  bonds  authorized  to  be  issued  under  said  acts  last  mentioned  there  was 


246  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

created  by  the  said  act  last  mentioned  an  officer  therein  called  "Fund  Com- 
missioner" whose  duty  it  was  and  is  to  receive  all  the  bonds  authorized  to  be 
issued  under  said  act,  and  during  the  existence  of  the  mortgages,  provided  to 
be  made  by  said  act  ;  to  receive  and  collect  all  the  profits,  earnings  and 
income  of  said  railroad  ;  to  apply  the  proceeds  of  the  sale  of  said  bonds  and 
the  said  earnings  to  the  completion  of  the  said  road  after  payment  of  his 
salary  and  accruing  expenses,  and  after  the  completion  of  said  railroad  that 
the  said  Fund  Commissioner  should  apply  any  surplus  after  paying  the 
accruing  interest  to  the  purchase  or  payment  of  the  bonds  which  should  be 
issued  under  the  provisions  of  said  act. 

Your  orators  further  show  that  the  act  last  named  with  all  the  previous 
acts  was  accepted  by  the  said  corporation  and  that  in  accordance  with  said 
act  the  Defendant,  the  Pacific  Railroad,  issued  her  bonds  to  the  full  amount 
authorized  by  said  act  of  One  thousand  dollars  each,  which  bonds  were  dated 
the  first  day  of  April,  1864,  and  in  conformity  with  the  provisions  of  said  act 
the  said  corporation  defendant  executed  its  Deed  of  Mortgage,  dated  the  first 
day  of  April,  1 864,  upon  that  portion  of  the  railroad  west  of  Dresden  to  Kansas 
City  to  your  orators  Henry  F.  Vail,  Solon  Humphreys  and  James  Purnett,  all 
of  the  City  of  New  York,  as  trustees  to  secure  to  the  holders  and  purchasers 
of  said  Bonds  so  authorized  by  said  act  and  issued  in  conformity  thereto  the 
payment  thereof. 

Your  orators  further  state  that  your  orators  Vail,  Humphreys  and  Purnett 
are  the  trustees  under  said  Deed  of  Trust  and  Mortgage  and  that  your  orator 
James  L.  Lamb  is  a  stockholder  of  said  corporation  owning  one  hundred  shares 
therein  and  that  he  is  also  owner  of  bonds  of  one  thousand  dollars 

each  so  issued  by  said  corporation  under  said  last  mentioned  act  and  secured 
as  above  mentioned,  and  they  further  show  that  a  very  large  amount  of  inter- 
est upon  the  bonds  of  the  state  of  Missouri  to  said  railroad  and  for  the  amount 
of  which  the  said  state  had  and  has  a  first  lien  upon  said  railroad  and  its 
appurtenances  (subject  to  the  prior  lien  created  by  virtue  of  the  terms  of  the 
last  mentioned  act  of  that  portion  of  said  railroad  west  of  Dresden)  have 
long  since  become  due  and  are  unpaid  together  with  the  said  bonds,  and  no 
part  of  the  same  has  been  taken  up  or  paid  by  said  railroad,  and  that  the 
one-third  of  the  said  fifteen  hundred  bonds  issued  by  said  corporation  and 
secured  upon  that  portion  of  said  railroad  West  of  Dresden  which  became  by 
their  tenor  due  on  the  first  day  of  April,  1868,  have  not  been  paid. 

Your  orators  further  show  that  the  defendants,  George  R.  Taylor,  Daniel 
R.  Garrison,  Henry  L.  Patterson,  James  H.  Lucas,  Charles  H.  Peck,  Oliver 
A.  Hart,  Robert  Earth,  Benjamin  Stickney,  Hudson  E.  Bridge,  and  James 
Harrison,  have,  for  more  than  six  months  last  past,  been  directors  of  said 
corporation,  having  been  legally  elected ;  and  that  said  defendant  George  H. 
Rea  was  elected  a  director  about  one  month  since  and  said  Edgar  and  Brown 


APPENDIX  '  -  247 

were  appointed  under  the  said  charter  of  said  corporation  directors  at  about  the 
same  time  ;  and  all  of  said  persons  have  been  since  their  election  and  appoint- 
ment directors  of  said  corporation  and  are"  now  acting  as  such  ;  that  said 
defendant  Tavlor  is  and  for  over  six  months  last  past  has  been  president  of 
said  corporation,  and  during  the  same  time  said  defendant  John  C.  Porter 
has  been  and  is  now  treasurer  thereof  ;  said  defendant  John  M.  Cooper  auditor 
thereof;  and  said  defendant  Madison  Miller  has  been  and  is  fund  commis- 
sioner under  the  provisions  of  the  act  last  mentioned. 

Your  orators  further  state  that  the  said  amount  of  principal  and  interest 
for  the  payment  of  which  the  said  corporation  was  bound  to  the  said  state  at 
the  commencement  of  the  present  year  amounted  to  about  ten  millions  of 
dollars  and  largely  more  than  the  full  value  of  the  road  ;  that  the  said  bonds 
so  issued  by  said  corporation  and  made  payable  four  years  after  date  were 
about  to  mature  and  that  there  was  owing  to  the  county  of  St.  Louis  by 
said  corporation  the  sum  of  Seven  Hundred  Thousand  dollars ;  that  there 
was  a  large  floating  debt  necessarily  contracted  in  the  furnishing  and  equip- 
ping of  said  railroad  due  by  said  corporation,  amounting  to  over  $700,000 ; 
that  a  large  expenditure  was  needed  to  put  the  road  in  good  running  order ; 
and  a  still  greater  expenditure  was  necessary  in  changing  the  gauge  of  the 
railroad  to  conform  to  that  of  other  railroads  to  the  east  and  west  of  said 
railroad  and  connecting  with  it ;  that  in  view  of  all  these  things  and  consider- 
ing it  best  for  the  interest  of  the  stockholders  as  also  for  the  state  of 
Missouri,  the  Board  of  Directors  of  said  corporation  determined  to  make 
an  effort  on  behalf  of  said  corporation  and  the  stockholders  thereof  to 
purchase  of  the  said  state  of  Missouri  its  interest,  debt,  claim  and  demands 
against  and  upon  said  railroad  and  corporation,  and  with  that  view  the 
said  Board  of  Directors,  by  resolution  passed  on  the  30th  day  of  Novem- 
ber 1867  appointed  Henry  L.  Patterson,  Daniel  R.  Garrison,  and  George  R. 
Taylor  a  committee  to  proceed  to  the  City  of  Jefferson  and  secure  the  pas- 
sage by  the  General  Assembly  of  said  state  of  Missouri  of  an  act  enabling 
the  said  corporation  and  its  stockholders  to  purchase  from  the  state  of  Mis- 
souri all  its  debt,  claim  and  demand  upon  said  road  and  said  corporation, 
and  authorizing  the  said  committee  to  employ  such  other  persons  to  assist 
them  as  they  might  deem  useful,  and  in  all  things  to  do  whatsoever  in  their 
judgment  they  might  consider  expedient  or  necessary  to  secure  the  success  of 
their  mission  ;  that  under  said  authorization  the  said  committee  proceeded 
to  Jefferson  City  and  caused  to  be  introduced  a  bill  before  the  General  Assembly 
of  this  state  having  that  end  in  view,  and  finally  the  said  General  Assembly 
did  pass  an  act,  entitled  "  An  act  for  the  sale  of  the  Pacific  Railroad  and  to 
foreclose  the  state's  lien  thereon  and  to  amend  the  charter  thereof,"  which  act 
was  on  the  31st  day  of  March  1868,  approved  by  the  governor  of  this  state; 
that  said  act  is  iust  and  fair  to  the  state  of  Missouri  and  just  and  fair  to  the 


248  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

corporation  and  its  stockholders,  and  was  such  an  act  as  did  and  should 
commend  itself  to  every  fair-minded  and  honest  legislator.  Yet  so  it  is  that 
the  said  committee  in  making,  after  the  passage  of  the  act,  a  report  of  their 
doings  in  the  said  matter,  reported  that  in  procuring  the  passage  of  the  act 
they  had  employed  agents  for  the  purpose  of  influencing  favorable  legislation 
thereon,  and  who  were  supposed  to  have  influence  with  the  dominant  political 
party  in  the  legislature,  and  had  expended  and  promised  monies  in  other 
ways  in  order  to  accomplish  the  passage  of  the  act,  but  in  what  way  or  to 
what  particular  persons  they  decline  to  specify;  that  the  said  committee 
reported  that  the  amount  of  such  expenses  for  the  purposes  aforesaid  which 
had  been  incurred  by  them  was  $193,648.60,  of  which  amount  $57,313.60  had 
been  paid,  leaving  an  amount  of  $134,865  still  unpaid;  that  a  copy  of  said 
report  is  herewith  filed  marked  Exhibit  A,  which  your  orators  pray  may  be 
taken  as  a  part  of  this  bill. 

Your  orators  have  heard  and  believe  and  so  charge  it  to  be  true  that  a 
large  amount  of  the  said  sum  of  $193,648.60  was  given  to  and  promised  to 
members  of  the  General  Assembly  of  the  state  of  Missouri  in  order  to  pro- 
cure their  votes  for  the  passage  of  said  bill ;  that  a  still  larger  amount  was 
given  and  promised  to  mere  lobby  agents  whose  business  it  is  corruptly  to 
influence  legislation  by  promoting  the  passage  of  unwise  and  corrupt  laws  for 
a  consideration  paid  or  promised  to  them,  and  to  resist  the  passage  of  wise 
and  just  laws  unless  those  whose  pecuniary  interests  may  be  supposed  to  be 
benefited  thereby  shall  satisfy  their  corrupt  and  illegal  demands,  and  your 
orators  charge  that  upon  the  face  of  the  report  it  stands  admitted  that  almost 
the  whole  of  this  large  sum  was  thus  illegally  expended  and  promised. 

Your  orators  further  state  that  the  whole  of  said  amount  of  $193,648.60, 
with  the  exception  of  some  small  sum  not  to  exceed  $10,000,  so  paid  and 
proposed  to  be  paid,  is  altogether  illegal,  unauthorized,  and  a  fraud  upon  the 
rights  of  stockholders  of  said  corporation,  of  the  holders  of  the  said  mort- 
gage bonds  so  executed  and  issued  by  said  corporation,  and  upon  the  state 
of  Missouri  and  upon  the  creditors  of  said  corporation. 

Your  orators  further  state  that  one  of  the  said  defendants,  Hudson  E. 
Bridge,  on  the  8th  day  of  April,  1868,  offered  in  said  board  a  resolution  that 
the  treasurer  of  the  company  be  and  thereby  was  instructed  not  to  pay  out 
any  money  or  give  any  notes  on  account  of  the  action  of  said  committee 
until  such  voucher  should  be  approved  by  the  Board  of  Directors,  which  reso- 
lution said  Board  of  Directors  rejected,  and  thereupon  on  the  9th  day  of  April, 
1868,  the  said  defendant.  Bridge,  on  behalf  of  himself  and  all  other  stock- 
holders, and  all  others  whose  interests  were  invaded  by  the  proposed  action 
of  said  board  in  the  payment  of  said  amount  of  $134,865  not  yet  paid  but 
promised  to  be  paid,  did  give  written  notice  to  said  George  R.  Taylor  as 
president,  to  said  Porter  as  treasurer,   and  to   said   Miller  as  fund  commis- 


APPENDIX  249 

sioiier  not  tt)  credit,  allow,  pay,  or  cause  to  be  paid,  any  money,  note,  or 
voucher  to  said  committee,  or  either  of  them,  or  upon  their  order  or  direc- 
tion in  and  about  the  pretended  and  illegal  claims,  expenditures,  and  con- 
tracts made  and  entered  into  by  said  committee  and  referred  to  in  their  said 
report  above  mentioned,  and  on  the  i6th  day  of  April,  1868,  he  did  serve 
upon  the  other  directors  of  said  company  a  similar  notice,  copies  of  which 
notices  are  herewith  filed  as  Exhibits  B,  C,  and  D,'  and  prayed  to  be  taken 
as  a  part  of  this  bill ;  that  on  the  same  day  the  Board  of  Directors  by  resolu- 
tion, a  majority  of  said  board  voting  therefor,  voted  that  the  president,  secre- 
tary, treasurer,  and  auditor  be  instructed  to  settle  all  outstanding  engage- 
ments made  by  the  said  committee  before  mentioned,  being  the  same  referred 
to  in  their  report  hereinbefore  mentioned. 

Your  orators  further  state  that  by  the  by-laws  of  said  corporation  before 
any  claim,  expense,  or  demand  against  said  corporation  can  be  paid  by  the 
treasurer  of  said  corporation  or  the  said  fund  commissioner,  the  same  must 
be  passed  upon,  allowed,  and  audited  by  the  auditor  of  said  corporation,  that 
though  by  the  act  of  February  10,  1864,  all  payments  and  disbursements  of 
the  receipts,  incomes,  and  avails  of  said  corporation  and  said  road  were  to  be 
made  by  said  fund  commissioner,  yet  in  fact  they  are  made  by  the  treasurer 
of  said  corporation. 

Your  orators  further  state  and  charge  that  it  is  the  intention  and  design  of 
said  board  of  directors  to  take,  apply,  and  expend  the  means  and  monies  of 
said  corporation  to  the  payment,  liquidation,  and  satisfaction  of  the  illegal 
and  corrupt  contracts  and  bargains  above  mentioned  to  the  extent  of  $134,- 
865  ;  that  the  amount  already  expended  by  them  is  greatly  more  than  suf- 
ficient to  pay  and  satisfy  all  fair,  honest,  and  legal  claims  and  demands  for 
any  legal  services  or  expenses  connected  with  said  legislation,  and  that  if  not 
restrained  therefrom  the  said  Board  of  Directors  and  the  officers  of  said  com- 
pany and  said  fund  commissioner  will  divert  said  monies  and  means  of  said 
corporation  to  the  payment  and  satisfaction  of  such  illegal  and  corrupt  con- 
tracts and  claims  ;  that  said  fund  commissioner,  though  knowing  the  kind 
and  character  of  the  said  expenditures  and  payments  so  made,  amounting  to 
$57,313.60,  and  that  the  greater  portion  of  them  were  illegal,  nevertheless  per- 
mitted such  payments  to  be  made,  and  will,  unless  restrained,  suffer  other 
monies  and  means  of  said  corporation  to  be  diverted  from  the  payment  of 
the  expenses,  claims,  and  liabilities  for  which  they  were  set  apart  by  the  act 
of  the  loth  of  February,  1864,  as  hereinbefore  set  forth,  and  expended  for 
the  satisfaction  of  the  illegal  and  corrupt  bargains  and  contracts  herein  men- 
tioned. So  it  is  that  sometimes  the  said  defendants,  or  some  of  them,  pre- 
tend that  large  sums  of  money  have  been  expended  and  promised  in   sub- 

'  These  "  Exhibits"  have  not  been  reproduced,  as  they  were  not  regarded  neces- 
sary. 


250  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

sidizing  the  newspaper  press,  but  your  orators  state  upon  information  and 
belief,  and  charge  that  no  such  sums  for  that  purpose  were  ever  expended 
or  promised  ;  sometimes  they  pretend  that  large  amounts  were  paid  and 
due  for  legal  opinions  obtained  by  said  board  from  learned  and  eminent 
members  of  the  bar,  whereas  your  orators  upon  information  and  belief 
state  and  charge  that  but  a  small  part,  and  less  than  $5000,  was  ever 
expended  for  such  a  purpose  ;  and  sometimes  the  said  defendants,  or  some  of 
them,  regretfully  admit  that  but  a  small  portion  thereof  was  expended  or 
promised  for  legal  or  proper  expenditures  or  services. 

Your  orators  further  state  upon  information  and  belief  and  charge  the  fact 
to  be  that  no  portion  of  said  sum  of  $134,865  so  engaged  and  contracted  by 
said  committee  and  so  ordered  by  said  board  of  directors  to  be  paid  has  yet 
been  paid. 

Your  orators  pray  that  said  corporation,  its  officers  and  servants  and  the 
said  defendants  and  each  of  them  may  be  perpetually  restrained  and  enjoined 
by  the  decree  and  injunction  of  this  court  from  auditing,  allowing,  giving  or 
paying  any  monies  or  other  consideration  of  said  corporation  on  account  of 
the  said  sum  of  one  hundred  and  thirty-four  thousand  eight  hundred  and 
sixty-five  dollars  referred  to  in  said  report  of  said  committee,  Henry  L.  Pat- 
terson, Daniel  R.  Garrison  and  George  R.  Taylor,  as  having  been  contracted 
for  by  said  committee  and  not  yet  paid  and  from  giving,  paying  out  or 
expending  any  monies  or  property  on  account  of  procuring  or  favoring  or 
assisting  in  procuring  the  passage  of  said  act  of  March  31,  1868;  and  that 
the  defendants  pay  the  costs  of  this  suit  and  that  your  orators  may  have  such 
other  and  further  relief  as  the  equity  of  the  case  may  require  and  as  to  your 
honors  may  seem  meet. 

To  the  end,  therefore,  that  the  defendants  may,  if  they  can,  show  why  your 
orators  should  not  have  the  relief  hereby  prayed  and  may  upon  their  several 
and  respective  knowledge,  remembrance,  information  and  belief,  full,  true, 
direct  and  perfect  answer  make  to  the  several  interrogatories  hereinafter 
numbered  and  set  forth,  that  is  to  say  — 

First:  Whether  the  defendants  Henry  L.  Patterson,  Daniel  R.  Garrison 
and  George  R.  Taylor  were  on  or  about  the  30th  day  of  November,  1867, 
appointed  a  committee  to  go  to  Jefferson  City  and  secure  the  passage  by  the 
general  assembly  of  the  state  of  Missouri  of  an  act  enabling  the  said  corpora- 
tion and  its  stockholders  to  purchase  all  the  debt,  claim  and  demand  of  said 
state  of  Missouri  upon  said  railroad  and  said  corporation  ? 

Second  :  Whether  said  persons  so  appointed  did  proceed  to  Jefferson 
City  and  did  use  their  exertions  to  procure  from  the  said  general  assembly 
the  passage  of  such  an  act  or  any  act  having  any  such  object  in  view  or  in 
relation  thereof  ? 

Third  :     Whether  in   and   about  procuring  the  passage  of  such  bill   the 


APPENDIX  251 

said  committee  incurred  any  expenses  for  board  and  lodging  and  other 
expenses  strictly  personal,  and  if  so  to  what  amount  ? 

Fourth :  Whether  on  account  of  said  object  and  in  furtherance  of  it  said 
committee  expended  monies  in  the  furnishing  of  entertainment,  wines  and 
liquors,  and  to  what  amount  ? 

Fifth :  Whether  on  account  of  said  object  and  in  furtherance  of  it,  said 
committee  expended  any  money  in  printing  agreements,  bills  and  memorials 
and  if  so  to  what  amount,  and  to  whom  paid  ? 

Sixth :  Whether  in  furtherance  of  said  object  the  said  committee  pro- 
cured the  opinions  of  men  learned  in  the  law  as  to  the  legal  rights  of  said 
corporation  and  of  the  state  of  Missouri  in  reference  to  said  railroad  and  in 
obtaining  such  opinions  they  expended  any  money,  and  if  any,  what  amount 
and  to  what  persons  the  same  was  paid,  specifying  the  amount  paid  each,  and 
if  any  amounts  for  such  legal  services  have  been  promised  to  be  paid  and  not 
yet  paid  for  what  amount  and  to  whom  ? 

Seventh  :  Whether  the  said  committee  employed  the  assistance  of  other 
persons  in  influencing  and  procuring  the  legislation  which  was  desired  or  in 
procuring  the  passage  of  any  act  by  said  general  assembly  of  the  state  of 
Missouri,  and  if  so  whether  said  committee  or  said  defendants  or  any  of  them 
paid  any  money  for  such  services  and  to  whom,  specifying  the  amount  to  be 
paid  to  each  and  whether  said  committee  promised  to  pay  either  any  money 
or  other  consideration  for  such  services  which  have  not  been  paid  or  per- 
formed and  if  so  how  much  and  to  whom,  specifying  the  amount  promised  or 
contracted  to  be  paid  to  each  ? 

Eighth  :  Whether  the  said  committee  or  any  of  them,  or  said  defendants 
or  any  of  them  paid  to  any  proprietor  or  editor  of  any  newspaper  published 
in  this  state,  any  money  or  promised  to  pay  any  money  for  the  printing  and 
publishing  any  agreements  or  articles  in  any  newspaper,  advocating  or  approv- 
ing the  passage  of  any  bill  by  said  general  assembly  having  in  view  the  sale 
and  disposition  by  the  state  of  Missouri  of  said  claim  and  demand  of  the  state 
against  said  corporation  and  said  road  or  in  keeping  silence  in  relation  thereto 
or  did  they  or  either  of  them  payor  promise  to  pay  to  any  proprietor  or  editor 
of  any  newspaper  published  in  this  state  any  sum  of  money  whatever  since 
the  first  meeting  of  the  said  general  assembly,  and  if  any  sum  was  paid  or 
promised  in  and  about  any  of  the  matters  in  this  interrogatory  mentioned, 
state  to  whom  and  in  what  amounts  to  each  ? 

Ninth  :  Whether  the  said  committee  or  any  of  them  or  the  said  defend- 
ants or  any  of  them  for  themselves  or  for  said  corporation  from  the  said  30th 
day  of  November  to  the  present  time  ever  paid  or  promised  to  pay  or  give  to 
any  member  of  the  last  general  assembly  of  the  state  of  Missouri  any  money, 
property  or  consideration  or  office  whatsoever  in  relation  to  or  connected 
with  said  railroad  or  said  corporation  or  in  relation  to  their  action  or  vote  in 


252  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

reference  to  said  railroad  or  said  corporation  or  in  relation  to  or  furtherance 
of  any  act  proposed  or  passed  relating  to  said  railroad  or  said  corporation  ? 

Tenth  :  Whether  the  said  defendants  or  either  of  them  ever  paid  or 
promised  to  pay  or  give  any  money,  or  other  consideration,  to  any  officer  of 
the  state  of  Missouri  or  of  said  corporation  about  any  matter  connected  with 
said  railroad  or  said  corporation  or  in  and  about  the  said  act  of  March  31, 
1 868,  or  any  proposed  act  ? 

Eleventh  :  Whether  in  and  about  the  procuring  of  said  act  in  the  last 
interrogatory  mentioned  said  committee  did  not  create  and  contract  expendi- 
tures and  liabilities  to  the  amount  of  $193,648.60,  and  if  so  state  in  detail 
how  much  and  to  whom  and  on  what  account  such  expenditures  have  been 
made  and  contracts  entered  into,  specifying  how  much  has  been  paid  to 
each  and  how  much  has  been  contracted  to  be  paid,  but  has  not  yet  been 
paid?  James  L.  Lamb. 

Subscribed  and  sworn  to  before  me  this  29th  day  of  April,  A.D.  1868,  at 
Springfield,  111.  Fred  M.  Cole. 

U.  S.  Com.,  South  Dist.,  111. 

May  it  please  your  honor  to  grant  to  your  orators  a  writ  of  subpctna  issu- 
ing out  of  and  under  the  seal  of  this  Honorable  Court,  directed  to  said  defend- 
ants the  Pacific  Railroad,  George  R.  Taylor,  Henry  L.  Patterson,  Daniel  R. 
Garrison,  Charles  H.  Peck,  James  H.  Lucas,  Oliver  A.  Hart,  Joseph  Brown, 
Robert  Barth,  George  H.  Rea,  Benjamin  Stickney,  James  Harrison,  Timothy 
B.  Edgar,  Hudson  E.  Bridge,  John  C.  Porter,  John  M.  Cooper,  and  Madison 
Miller,  commanding  them  to  appear  and  make  answer  to  this  Bill  of  Com- 
plaint, and  to  perform  and  abide  by  such  order  and  decree  as  to  the  Court 
may  seem  required  by  principles  of  equity  and  good  conscience. 

May  it  also  please  your  Honors  to  grant  to  your  orators  a  provisional  or 
preliminary  injunction  issuing  out  of  and  under  the  seal  of  this  Honorable 
Court,  enjoining  and  restraining  said  corporation,  its  officers,  servants  and 
agents,  and  other  defendants  herein  named,  to  the  same  purport,  tenor  and 
effect  as  hereinbefore  prayed  for  in  regard  to  said  perpetual  injunction,  and 
your  orators  will  ever  pray,  &c.  Glover  &  Shepley, 

Solicitors  for  Complainants. 

United  States  of  America,  ) 

y  ss. 

District  of  Illinois.  ) 

On  this  29th  day  of  April,  1868,  before  me  came  James  L.  Lamb,  acting 
for  himself  and  for  and  on  behalf  of  the  complainants  in  said  Bill  of  Com- 
plaint, and  being  by  me  duly  sworn  doth  depose  and  say  that  he  has  read  the 
said  bill  and  knows  the  contents  thereof,  and  states  that  as  to  those  matters 


APPENDIX  253 

and  things  therein  stated  as  of  complainant's  knowledge,  they  are  true,  and 
as  to  those  stated  as  upon  information  and  belief  he  believes  them  to  be  true. 

Fred  N.  Cole, 
U.  S.  Com.,  South  Dist.,  111. 

(Exhibit  "A"  to  Bill  of  Complaint.) 
COPY. 

Report. 

The  undersigned  committee,  appointed  by  the  Board  of  Directors  of  the 
Pacific  Railroad,  in  pursuance  of  the  following  resolution,  to-wit : 

"Resolved,  That  Henry  L.  Patterson,  Dan'l  R.  Garrison,  and  George  R. 
"  Taylor,  be  and  are  hereby  appointed  a  committee  to  proceed  to  Jefferson 
"  City  during  the  approaching  session  of  the  Legislature,  and  there  urge, 
"  and,  if  possible,  obtain  such  legislation  as  will  enable  this  Board,  as  Trus- 
"  tees  of  the  Stockholders,  to  purchase  of  the  state  her  claim  upon  this  com- 
"  pany  ;  and  they  are  instructed  to  use  their  best  efforts  to  have  such  legisla- 
"  tion  to  conform  as  nearly  as  they  can  to  the  bill  approved  by  this  board; 
"  and  they  are  hereby  authorized  to  employ  such  other  persons  to  assist  them 
"  as  they  may  deem  useful,  and  in  all  things  to  do  whatsoever  in  their  judg- 
"  ment  they  may  consider  expedient  or  necessary  to  secure  the  success  of 
"  their  mission." 

Under  this  resolution,  this  committee  accepted  service.  By  it  they  were 
"  z«.y/r«r/(f^/ to  use  their  best  efforts,"  and  "a«//z(?r/5'^^  to  employ  such  other 
persons  to  assist  them,"  etc.,  in  attaining  the  desired  end.  The  language  of 
the  resolution  is  so  full,  positive  and  explicit,  and  granted  such  large  powers, 
that  this  committee  felt  complimented  by,  and  grateful  to  the  board  for  the 
unlimited  confidence  reposed  in  their  judgment  and  discretion.  Therefore, 
instantly  upon  their  appointment  (November  30th,  1867),  they  entered  actively 
and  earnestly  upon  the  duties  assigned  them.  They  thought  that  the  first 
important  step  to  be  taken  was  to  secure  a  favorable  consideration  of  our 
scheme  by  the  St.  Louis  press,  and  at  once  determined  to  accomplish  this  (as 
it  seemed  to  us)  great  end.  After  very  many  conferences,  much  delay  and 
anxiety  this  was  effected.  Our  next  move  was  to  engage,  or  "employ" 
in  our  interests,  "persons"  of  such  political  affinities,  standing  and  power 
with  the  dominant  party  in  the  legislature,  as  would  soften  down  or  remove 
the  "Copperhead"  character  attributed  to  our  board,  and  enable  us  to  go 
before  the  party  endorsed  by  some  high  in  the  faith.  Were  we  to  detail  our 
efforts  in  this  direction  it  would  lengthen  this  report  to  a  fatiguing  extent. 
Suffice  it,  therefore,  to  say,  after  more  than  a  month's  daily  search,  consulta- 
tions and  inquiries,  we  found  the  men  suited  to  our  purpose.  They  were,  in 
their  political,  social  and  business  characters  what  we  desired  ;  had  had  legis- 


2  54  statp:  aid  to  railways  in   Missouri 

lative  experience  and  were  of  our  views,  agreeing  to  the  fairness  of  our  offer 
to  the  state,  and  willing  for  a  "  sufficient  consideration"  to  abandon  their  own 
business  and  undertake  ours  ;  they  were  engaged,  and  did  good  service.  Did 
not  the  policy  of  this  report  forbid  it,  we  should  be  most  happy  to  here  insert 
all  their  names,  that  hereafter  this  company  might  know  who  were  their 
friends.  They  were  paid  a  small  portion  of  the  stipulated  amount  down,  the 
balance  being  made  "contingent"  upon  success.  These  contingents  are 
now  outstanding,  the  parties  relying  upon  the  personal  pledges  of  this  com- 
mittee and  the  good  faith  of  the  Pacific  Railroad  Company  for  ultimate  pay- 
ment. 

You  are  all  probably  aware  that  at  a  former  session  of  the  legislature, 
some  parties  presented  a  bill  for  the  sale  of  this  road  to  another  corporation  and 
that  four  millions,  the  then  offer,  came  near  buying  it.  This  led  us  to  believe 
that  an  offer  of  the  same  amount  made  in  the  interests  of  the  stockholders 
would  be  favorably  received. 

On  our  arrival  at  the  capital  we  soon  discovered  that  we  were  mistaken  — 
instead  of  favor  we  met  hostility  most  violent  and  unaccountable  of  twelve 
members  from  St.  Louis  county,  eight  were  determined  and  bitter  in  their 
opposition  —  and  outside  of  the  "House,"  cliques  were  formed  to  spy,  report 
and  oppose,  scandalous  rumors  (sic)  circulate  freely ;  libelous  assertion  was 
current,  and  telegrams  were  intercepted  and  returned  by  mail  to  the  enemy 
—  every  sort  of  parliamentary  trick  was  resorted  to,  to  cripple  by  amendment 
or  delay  or  defeat  any  favorable  turn  we  were  able  to  give  the  question. 
When  present  during  the  discussions,  we  were  denounced  as  belonging  to  a 
set  of  thieves  (doing  us  the  favor,  however,  to  include  the  whole  board). 
Our  earnings  were  shown  to  be  millions  and  not  a  dollar  paid  to  the  state,  all 
gone  into  the  pockets  of  the  directors  —  "Those  Railroad Kins^s."  We  men- 
tion these  little  pleasantries,  with  a  view  to  give  the  Board  an  idea  of  our 
experience  at  Jefferson  City  in  the  year  1868,  and  they  may  be  useful  here- 
after should  another  committee  be  commissioned  for  the  same  locality.  To 
overcome  a  determination  to  seize  this  road,  as  the  Iron  Mountain  had  been 
and  as  ours  was  —  almost  —  we  called  for  the  opinions  of  eminent  and  popular 
"  counsellors  at  law  "  and  collected  those  we  had  before  obtained  relating  to 
our  legal  rights ;  these  with  an  explanatory  address  were  published  in  pam- 
phlet and  at  a  meeting  called  for  the  purpose  were  read,  argued  and  distrib- 
uted—  this  was  somewhat  costly,  but  we  think  it  paid  well,  the  effect  fully 
meeting  our  judgment  —  for  in  the  course  of  a  week  or  ten  days  we  found 
the  "  Seizing  fever"  abating.  After  allaying  this  immediate  and  dangerous 
threat  our  next  effort  was  to  impress  upon  the  minds  of  legislators  the  crip- 
pled condition  of  the  company,  dilapidated  condition  of  the  road,  our  inability 
to  remedy  either,  (sic)  determination  under  any  circumstances  to  hold  on  until 
1870,  and  the  necessity  of  a  sale. 


APPENDIX 


255 


By  much  figuring  we  showed  enormous  amounts  of  cash  demanded  for 
instant  use.  Our  progress  now  was  very  slow,  and  at  times  terribly  discour- 
aging ;  but  persevering  from  g  a.m.  till  past  midnight  week  after  week  ably 
assisted  by  the  numerous  parties  "  engaged"  for  the  purpose,  ihroxxgh.  them 
we  were  at  length  let  into  the  secret  of  how  things  are  sometimes  done,  when 
all  other  modes  are  ineffectual ;  we  saw  no  possible  chance  for  success,  unless 
we  adopted  what  appeared  to  be  the  usual  mode,  as  understood  and  prac- 
ticed by  many.  It  was  terribly  costly  for  an  ordinary  job  but  as  we  were 
going  for  millions,  and  every  one  off  counted  well,  we  determined,  after  seri- 
ous consultation  with  discreet  friends,  not  to  fail  —  leaving  the  morality  of 
such  proceedings  to  those  who  have  inaugurated  the  system  and  divided  its 
gains. 

The  bill  is  now  passed,  approved  by  the  executive  and  before  this  Board 
to  become  upon  us  a  binding  law,  if  we  so  elect,  the  sum  of  five  millions  is 
the  price,  the  state  abating  six  millions  of  her  claim  —  the  terms  of^  payment 
very  favorable. 

It  was  obtained  through  our  exertions  and  appliances  at  a  cost  to  the 
company  or  stockholders  of  $57,313.60  already  paid  and  $134,865  to  be  paid, 
the  whole  aggregating  $193,648.60;  this  cost  in  dollars  is  by  no  means  all, 
for  it  cost  this  committee  an  amount  of  anxious  labor,  pain,  mortification, 
and  we  may  safely  add  degradation,  that  they  will  never  again  willingly 
undergo  and  which  this  or  any  other  company  can  never  adequately  compen- 
sate. This  committee  would  be  truly  ungrateful  were  they  to  close  this 
report  without  referring  to  the  devotion  to  our  interests  shown  throughout 
by  our  senator,  now  co-director,  George  H.  Rea ;  from  the  beginning  he  was 
our  staunch  and  firm  friend.  We  were  indebted  also  for  valuable  assistance 
to  Messrs.  Stephen  Ridgeley,  J.  G.  Woerner  and  H.  J.  Spaunhorst  of  the 
Senate,  and  G.  C.  Van  Wagoner,  C.  H.  Branscomb,  C.  R.  Smythe  and  Nor- 
man J.  Colman  of  the  "  House."  Our  labors  in  this  behalf  are  now  ended, 
except  so  far  as  arranging  on  the  best  terms  we  can  for  the  company's  con- 
venience the  outstanding  pledges  of  this  committee.  Sufficient  is  known  as 
to  accomplish  (sic)  facts  for  the  Board  to  decide  whether  we  have  done  well 
or  otherwise,  whether  we  have  transcended  the  authority  the  resolution 
vested  in  us,  or  abused  the  confidence  you  did  us  the  honor  to  repose  in  us. 

Six  millions  of  the  state  debt  abated,  the  terms  of  the  five  millions  to  be 
paid  unusually  favorable,  the  threatening  attitude  of  the  state  removed,  the 
independence  of  the  company  secured,  stockholders  protected,  and  promised 
ere  long  some  return  for  their  mouldy  investments :  these  are  some  of  the 
advantages  secured  by  the  exertions  of  your  committee ;  to  offset  these  we 
have  the  cost  of  obtaining  them  which  through  unexpected  circumstances, 
undeserved  accusations,  foul  combinations  and  dishonest  schemes  is  swelled 
to  an  amount  incomprehensible  to  some,  unsatisfactory  to  others,  but,  as  this 


256  STATE    AID    TO    RAILWAYS    IN    MISSOURI 

committee  believe,  quite  low — considering  modern  railroad  operations. 
Thus  presenting  our  experience  and  the  result  of  our  labors  we  regret  for  our 
own  sakes  (in  the  future)  that  we  cannot  without  violating  solemn  pledges 
name  to  you  in  detail  the  name,  service  and  pay  of  each  person  engaged  and 
that  the  necessities  of  the  case  permit  us  only  to  speak  oi />arfzes  and  (sic) 
aggregate,  in  general,  rather  than  in  specific  terms.  In  conclusion  it  is  sub- 
mitted to  this  Board  to  say  whether  the  contracts  made  by  the  Pacific  Rail- 
road Company  through  their  committee,  under  and  by  virtue  of  the  resolution 
of  November  30,  1867,  and  in  furtherance  of  the  interests  of  the  stockholders 
of  said  company,  shall  be  honorably  and  speedily  fulfilled,  or  whether,  hav- 
ing sent  them  out  as  your  fully  empowered  and  accredited  agents  —  you  will 
now  deny,  or  question  their  acts  and  put  upon  them  the  mortifications 
and  pecuniary  responsibilities  your  repudiation  would  certainly  bring.  We 
have  no  such  fear  and  would  not  have  disfigured  this  report  by  any  such 
allusion  but  for  the  knowledge  that  threats  looking  to  such  result  had  been 
made. 

Respectfully  submitted. 

Henry  L.  Patterson, 
(Signed)  Daniel  R.  Garrison, 

G.  R.  Taylor, 

Comtnittee. 

And  afterwards,  to-wit :  on  the  12th  day  of  October,  a.d.  1868,  the  fol- 
lowing among  other  proceedings  were  had  and  appear  of  record  in  said  cause, 
to-wit : 

(Final  Decree.) 

James  L.  Lamb,  et  al..  Complainants, 

against 

The  Pacific  Railroad  Company,  et  al..  Defendants. 

And  now  at  this  time  come  the  Complainants  by  their  Solicitors  and  move 
the  court  to  enter  up  a  decree  pro  confesso  in  the  above  cause  against  the 
Defendants,  and  it  appearing  to  the  Court,  that  said  defendants  have  failed 
to  plead,  demur,  or  answer  to  the  Bill  of  Complaint  within  the  time  required 
by  law  and  the  Rules  of  this  Court,  It  is  ordered  that  the  said  Bill  of  Com- 
plaint be  taken  as  confessed  by  them  and  each  of  them,  and  the  Court  doth 
therefore  order,  adjudge,  and  decree  that  the  injunction  heretofore  granted  in 
this  cause  be  made  perpetual,  and  that  the  said  Defendants,  the  Pacific  Rail- 
road, George  R.  Taylor,  Henry  L.  Patterson.  Daniel  R.  Garrison,  Charles  H. 
Peck,  James  H.  Lucas,  Oliver  A.  Hart,  Joseph  Brown,  Robert  Barth,  George 
H.  Rea,  Benjamin  Stickney,  James  Harrison,  Timothy  B.  Edgar,  Hudson  E. 
Bridge,  John  C.  Porter,  John  M.  Cooper,  and  Madison  Miller,  and  each  of 


APPENDIX 


257 


them,  their  servants,  and  agents,  be  forever  enjoined  and  restrained  from 
giving,  paying  out  or  expending  any  money  or  property  or  obligation  of  said 
Corporation,  the  Pacific  Railroad,  on  account  of  procuring  or  favoring,  or 
assisting  in  procuring  the  passage  of  the  Act  of  the  General  Assembly  of  the 
state  of  Missouri,  approved  the  31st  day  of  March,  1868,  entitled  "An  act  for 
the  sale  of  the  Pacific  Railroad  and  to  foreclose  the  state's  lien  thereon,"  and 
to  amend  "the  Charter  thereof"  and  from  auditing  or  allowing  any  claim,  or 
giving  or  paying  any  money,  property  or  obligation  of  the  said  Pacific  Rail- 
road on  account  of  any  alleged  contract,  or  liability,  entered  into  by  said 
Patterson,  Garrison  and  Taylor  as  a  Committee,  on  the  part  of  said  corpora- 
tion, amounting  to  one  hundred  and  thirty-four  thousand  eight  hundred  and 
sixty-five  dollars  mentioned  in  the  report  of  said  Patterson,  Garrison  and 
Taylor  to  the  Board  of  Directors  of  said  Corporation,  and  referred  to  in  said 
Bill  of  Complaint,  as  having  been  contracted  to  be  paid  in  order  to  procure 
the  passage  of  said  Act  of  the  3d  [31st]  day  of  March,  1868,  and  that  said 
defendants  do  pay  the  costs  of  this  suit  and  that  an  execution  or  fee  bill  issue 
therefor. 

United  States  of  America,  ) 

Eastern  Division  of  the  Eastern  Judicial    >■  ss. 
District  of  Missouri.  ) 

I,  T.  L.  Crawford,  Clerk  of  the  Circuit  Court  of  the  United  States,  in  and 
for  the  Eastern  Division  of  the  Eastern  Judicial  District  of  Missouri,  do 
hereby  certify  the  writing  hereto  attached  to  be  a  true  copy  of  Bill  of  Com- 
plaint, Exhibit  "A"  and  Final  Decree  in  Case  No.  2590  of  James  L.  Lamb 
et  al,  Complainants,  against  the  Pacific  Railroad  Company  £"/«/.,  Defendants, 
as  fully  as  the  same  remain  on  file  and  of  record  in  said  case  in  my  of^ce. 

IN  WITNESS  WHEREOF,  I  hereunto  subscribe  my  name  and  affix  the 
seal  of  said  Court,  at  office  in  the  city  of  St.  Louis,  in  the  Eastern 
Division  of  said  District,  this  first  day  of  November  in  the  year  of 
our  Lord,  eighteen  hundred  and  ninety-four, 

T.  L.  Crawford, 
Clerk  of  said  Court, 
By  John  J.  Conway, 

Deputy. 


INDEX. 


Accounts,  publicity  of,  in  Massachusetts 
70  ;  in  Missouri  69 

Aid  to  railways,  first  grant  of  in  Missouri 
65 ;  second  80 ;  policy  of  granting, 
popular  in  Missouri  74  ;  act  of  Decem- 
ber 10,  1855,  analyzed  100;  reasons 
for  final  grant   105;   further,  attempted 

113 
Alabama,  internal  improvements  in  215  ; 
debt  of,  for  railways  216;  former  laws 
of,  concerning   internal    improvements 
repealed  216 
Allen,  Thomas,  the  railway  needs  of  St. 
Louis  and  Missouri  pointed  out  by  58  ; 
letter  of,    to    Governor   Fletcher  con- 
cerning bids  for   railways    149 ;    testi- 
mony of,    concerning    sale    of    certain 
railways  153;  title  of,  to  the  .St.  Louis 
and    Iron    Mountain    confirmed    by  the 
legislature  155 
Alton  and  Springfield  Railroad  53 
Arkansas,  internal  improvements  in  217  ; 

repudiating  measures  in  216 
Atchison  and  St.  Joseph  Railroad  142 
Atlantic  States,  railway  facilities  of  54 

Banks,  false   conceptions  of  functions  of 

17,30 
Banks    and    banking,    western    views  of 
30  ;     debts    in    Alabama,    Mississippi, 
Arkansas,  Louisiana  and  Missouri  on 
account  of    28 ;   in  Missouri   30 ;    rail- 
ways not  to  be  connected  with  in  Mis- 
souri 7 1 
Baltimore,  a  railway  wanted  by  15 
Baltimore  and  Ohio  Railroad  15 
Benton,  Thomas  H.,  ideas  of,  concerning 
a  railway  from  the  Mississippi  to  the 
Pacific  61 


Blue  Ridge  Railroad  in  South  Carolina 
209 

Board  of  Internal  Improvements  estab- 
lished 36 

Board  of  Public  Works,  duties  of,  per- 
tain to  only  two  roads  96 ;  powers  of, 
not  broad  enough  97  ;  powers  of, 
made  more  extensive  109 ;  not  con- 
tinued 130 

Bonds,  of  Missouri,  sold  at  low  rates  108  ; 
"guaranteed"  7's  hard  to  sell  109; 
low  price  of  1 14 

Cairo  and  Fulton  Railroad,  prospective 
route  of  described  68 ;  aided  by  the 
state  106  ;  default  of,  in  interest  pay- 
ments 113;  work  of  construction  on 
138;  sale  of,  provided  for  143;  sold 
146;  sale  of,  approved  by  the  gover- 
nor 145 

Canals,  in  New  York  1 1  ;  in  Pennsyl- 
vania    12;      in     Ohio,    not    profitable 

19 

Capital,  investment  of,  in  Missouri  hin- 
dered by  too  rigid  laws  79 

Change  bills,  issued  by  the  Western  and 
Atlantic  Railroad  Company  in  Georgia 
200 

Chicago,  commerce  of,  compared  with 
that  of  St.  Louis  (1850)  50,51  ;  railway 
facilities  of  (1850)  52;  railways  from, 
penetrating  the  northwest  59 

Committee,  an  investigating,  in  connec- 
tion with  railway  proceedings  in  Mis- 
souri 146;  report  of  the  McGinnis  in- 
vestigating 147;  further  investigations 
by  149, 152 

Construction,  work  done  in  Missouri  in 
railway,  1858-9  III,  112 


259 


26o 


INDEX 


Contracts,  faults  of  large,  in  railway  con- 
struction 92 

Corporation  Law  of  Missouri,  general 
fault  of  79 

Corruption,  fears  of  in  Missouri  91  ;  no 
proof  of  92,  94;  charges  of  150;  proof 
of  185  ;  farcical  investigation  of  charges 
of  191 ;  in  Tennessee  205 ;  in  Indi- 
ana 223;  in  Pennsylvania  225 

Cost  of  railways,  estimates  of,  too  low 
5 ;  causes  for  great  94  ;  in  Missouri 
compared  with  cost  in  other  states  120, 
121  ;  cost  of  the  Hannibal  and  St.  Joseph 
112;  of  the  North  Missouri  112  ;  of  the 
Pacific  12  X  ;  of  the  South  West  Branch 
121-124;  of  the  St.  Louis  and  Iron 
Mountain    112 

Credit  of  Missouri,  how  to  be  protected 
109  ;  mortgages  in  railways  may  have 
to  be  foreclosed  to  restore  141  ;  constitu- 
tional amendment  against  the  use  of, 
for  aiding  private  enterprises  194 

XJrisis  of  1857,  effect  of,  on  railway  legis- 
lation in  Missouri  108 

Cumberland  Road  7 

Debt  of  Missouri,  limitation  of,  for  inter- 
nal-improvement purposes  113;  for 
railways  187;  miles  of  railway  for 
which  incurred  190;  total  incurred  for 
railways  139-187 
Defense  warrants,  issued  in  Missouri  125 
Duties,  on  railway  iron  to  be  remitted 
6 

Earnings  of  railways,  increase  of  during 
the  war  127;  on  the  Pacific  1 16-176; 
on  the  North  Missouri  117,  160  ;  on  the 
St.  Louis  and  Iron  Mountain  1 17,  153  ; 
on  the  Hannibal  and  St.  Joseph  1 18  ;  on 
the  South  West  Branch  117,  170 

Erie  Canal  4, 7,  11 ;  earnings  of  1 1  ;  effect 
of  on  western  states  18,  21 

Finances,  condition  of,  in  Missouri  when 
state  began  aiding  railways  66 


Financiering,  bad,  in  Missouri  97 

F'isk,  General  Clinton   B.,   appointed    by 

the    governor    to    operate    the     South 

West  Branch  as  a  state  road  170 
Florida,  internal  improvements  in  220 
F'und   commissioner,  office  of,  established 

130  ;    duties  of  131 
Funds,  need  of,  for  internal  improvements 

6 ;    a    bank     to    be    established    as     a 

means  of  obtaining  6 
Fremont,  General  John    B.,  South  West 

Branch    purchased    by   168 ;  default  in 

interest  payments  by  169;    South  West 

Branch  sold  by  169 

Georgia,  internal-improvement  debt  of 
27  ;  internal-improvement  experiment 
of  2 ;  railways  removed  from  politics 
in  202  ;  unconstitutional  issue  of  bonds 
in  202  ;  railways  leased  by  201  ;  litiga- 
tion in,  on  account  of  railways  203  ; 
returns  to,  received  from  connection 
with  railways  228 

Highways,  or  common  roads,  from  Mis- 
souri to  Mexico  2 

Hannibal  and  St.  Joseph  Railroad,  me- 
morial to  Congress  to  secure  lands  for 
40 ;  aided  by  the  state  65  ;  land 
grant  to  73  ;  work  of  construction  not 
early  commenced  on  87  ;  eastern 
capital  interested  in  87  ;  financial 
condition  of  103;  sinking-fund  refiuire- 
ments  complied  with  by  105;  com- 
pletion of  1 1 1  ;  cost  of  112;  earnings 
of  118 

Illinois,  internal  improvements  in  20 ; 
Northern  Cross  Railroad  in  22  ;  inter- 
nal-improvement debt  of  23  ;  returns 
in,  resulting  from  aiding  railways  229 
Illinois  and  Michigan  Canal  21 
Incompetency  in  internal-improvement 
matters,  in  Missouri  lOO  ;  in  North  Caro- 
lina 211;  in  Illinois  22  ;  in  Pennsylvania 
13  ;  in  New  York  9 


INDEX 


26j[ 


Indiana,  internal  improvements  in  23 

Inexperience,  one  cause  of  increased  cost 
of  railways  120 

Interest,  default  in  payment  of  by  rail- 
way companies  no,  115;  causes  for 
default  in  116;  railways  remain  in 
default  of   140 

Interest  relief  act  99 

Internal  improvements,  in  Alabama  215  ; 
in  Arkansas  217  ;  in  Florida  220;  in 
Illinois  20;  in  Indiana  23;  in  Ken- 
tucky 214;  in  Louisiana  212;  in 
Maryland  14;  in  Massachusetts  44; 
in  Michigan  25  ;  not  a  success  in 
Missouri  7  ;  renewal  of  interest  in, 
in  Missouri  39 ;  in  New  York  8 ;  in 
North  Carolina  210;  in  Ohio  17;  in 
Pennsylvania  11  ;  in  South  Carolina 
208 ;  in  Tennessee  203 ;  in  Texas 
219;  in  Virginia  206  ;  cost  of  in  Penn- 
sylvania 13;  general  characteristics 
of  in  western  states  16  ;  none  in  New 
England  states  44 ;  southern  states 
interested  in  1837  46,  in  1850  46; 
southern  states  not  interested  in  before 
the  war  197  ;  causes  of  failure  of  exper- 
iments in  222 

Iron  industry,  railways  to  develop  in 
Missouri  4  ;    condition  of  48 

King  Boodle,  influence  of,  in  legislature 

of  Missouri  184 
Kentucky,      internal      improvements     in 

214 

Land  grants,  to  Alabama,  Indiana,  Illi- 
nois, Ohio,  Mississippi,  and  Missouri 
37 ;  unproductivity  of  in  Missouri 
118 
Loans,  extent  of  in  Pennsylvania  13 
Louisiana,  internal  improvements  in  212  ; 
repudiating  measures  passed  by  legis- 
lature of  214 

Maryland,  default  in  interest  payments 
by  15 ;    debt  of  16 


Massachusetts,  internal-improvement  debt 
of    27  ;  internal  improvements  in  44 

McKay,  Read,  et  al.  purchasers  of  the 
Cairo  and  Fulton  and  St.  Louis  and 
Iron  Mountain  railroads  146 

Memorials,  to  Congress  concerning 
improvement  of  rivers  3  ;  to  Congress 
for  land  grants  6,  41,  47  ;  to  the  legisla- 
ture of  Missouri  by  the  Pacific  Railroad 
Company  76  ;  by  the  North  Missouri 
Railroad  Company  78 

Memphis,  railway  convention  in  60 

Mexico,  trade  to,  1,2 

Miami  canal  19 

Michigan,  internal  improvements  in  25  ; 
repudiating  measures  passed  by  legisla- 
ture of  224 

Missouri  Valley  Railroad  Company  157; 
liberal  policy  adopted  by  legislature 
towards  157  ;  able  to  pay  interest  dues 
158  ;  lien  of  state  released  on  159 

Money,  false  notions  of  90 ;  right  given 
by  Georgia  to  a  railway  company  to 
issue  cheap  200 ;  results  of  cheap,  in 
Georgia  200 

Natural  resources,  of  Missouri  47 

Net  earnings,  privilege  granted  to  apply 
to  the  extension  of  roads  130  ;  on  some 
roads  sufficient  to  pay  interest  owed  to 
the  state  140,  161 

New  England  States,  no  internal-improve- 
ment enterprises  projected  in  44 

New  York,  internal  improvements  in  8; 
debt  of  10 ;  change  of  policy  in 
internal  improvements  in  9 

North  Carolina,  internal  improvements 
in  210;  bonds  of,  recklessly  granted  to 
railways  21 1  ;  credit  of,  undermined  by 
grants  of  bonds  to  railways  211  ;  re- 
pudiating measures  passed  by  legis- 
lature of  212 

North  Missouri  Railroad,  prospective  route 
of,  described  67  ;  aided  by  the  state 
81;  route  of,  located  86;  cost  of 
first  division  of,  exceeds  estimates  86  ; 


262 


INDEX 


work  of  construction  on  104 ;  com- 
pleted to  junction  with  the  Hannibal  and 
St.  Joseph  112;  cost  of  ill  ;  default  of 
interest  payments  113;  earnings  of  117  ; 
destruction  of  parts  of,  by  Confederates 
26;  West  Branch  128;  privilege  to 
issue  first-mortgage  bonds  granted  to, 
by  the  state  129  ;  bonds  of,  do  not  sell 
133;  an  unequal  competitor  with  the 
Hannibal  and  St.  Joseph  135  ;  unable  to 
carry  the  freight  offered  it  136  ;  second 
lien  on,  taken  by  the  state  137  ;   sold  167 

Ohio,  internal  improvements  in  17;  debt  of, 
limited  in  amount  19  ;  debt  of  20  ;  canal 
tolls  do  not  pay  interest  on  internal-im- 
provement debt  of  20 

Ohio  Canal  iS 

Pacific  Railroad,  aided  by  the  state  65  ; 
possible  amount  of  land  to  fall  to  76  ; 
land  grant  to  80 ;  "inland"  route  of, 
west  of  Jefferson  City,  conditions  of 
81  ;  cost  of  first  division  of,  exceeds 
estimates  83  ;  short  of  funds  84  ;  grants 
of  aid  to,  by  St.  Louis  city  and  county 
84  ;  more  aid  wanted  by  103;  cost 
of  112;  default  in  interest  payments 
by  115;  earnings  of  116;  destruction 
of  parts  of  by  Confederates  126;  cost 
of  a  division  of  12S;  privilege  of 
issuing  first-mortgage  bonds  granted 
to,  by  the  state  129;  work  on,  sus- 
pended two  years  127  ;  bonds  of,  sold 
at  par  131  ;  in  need  of  funds  133; 
special  grant  to,  by  St.  Louis  county 
133;  release  from  lien  held  by  state 
asked  for  173  ;  approximate  value  of 
174;  if  sold,  stockholders  fear  foreign 
capital  will  get  control  of  175;  value 
of,  report  of  a  committee  on  177; 
growth  of  business  of  176;  minimum 
value  of,  as  given  by  committee  177  ; 
earning  capacity  of  177  ;  sale  of, 
course  of  bill  providing  for  180;  cor- 
ruption in  connection  with  sale  of   185 


Parish,  J.  W.,  rumored  bid  of,  for  St. 
Louis  and  Iron  Mountain  Railroad  150 

Passenger  train,  first  to  run  from  Kansas 
City  to  St.  Louis  133 

Paternalism,  results  of,  in  southern  states 
29 

Pennsylvania,  internal  improvements  in 
II  ;  private  versus  state  railways  in 
14  ;  incompetency  in  internal  improve- 
ments in  224 

Platte  County  Railroad,  prospective  route 
of  68;  aided  106;  default  in  interest 
payments  by  I16;  earnings  of  117; 
unsatisfactory  reports  to  Board  of  Public 
Works  by   122;  violation  of  law  by  122 

Platte  Country  Railroad,  same  as  Platte 
County  Railroad  138  ;  work  of  con- 
struction on  138 ;  sale  of,  provided  for 
141  ;  cursed  by  a  blood-sucking  man- 
agement 142;  sale  of,  provided  for  143; 
sold  145 

Private  enterprise,  possible  competition  of 
railways  under  state  management  with 
those  under  private  management  227  ; 
versus  state  activity  229 

Profits,  on  Illinois  railways  79 

Railways,   time    allowed    for    completing 

71 

Railway  aid,  plan  of,  to  be  adopted  in 
Missouri  65 

Railway  charters,  duties  imposed  by  and 
privileges  granted  in  68 

Railway  construction,  begun  in  Missouri 
73 ;  progress  of,  on  Pacific  Railroad 
79;  hindrances  to,  in  Missouri  84 

Railway  facilities,  comparison  of,  be- 
tween states  having  aided  and  those 
not  having  aided  (1850)  45 

Railway  land  grant  to  Missouri  73 

Railway  locomotive,  first  west  of  the 
Mississippi  80 

Railway  system  of  Missouri,  a  system, 
radiating  from  St.  Louis  72 

Relief  notes,  in  Pennsylvania  13 

Revenue  bonds  no 


INDEX 


263 


Rivers,   board   of   internal    improvements 

to  improve  in  Missouri  34 
Road    and   canal    fund,   in    Missouri    35 ; 

distributed  among  counties  38 

St.  Louis,  railway  convention  in  3 ; 
state  tobacco  warehouse  in  33 ;  the 
chief  center  to  be  developed  by  pro- 
spective railways  48  ;  industries  in 
50;  commerce  of  51  ;  inactivity  of, 
in  securing  railway  facilities  53  '.  rail- 
way convention  in   57 

St.  Louis  city  and  county,  release  from 
interest  payments  granted  to  North 
Missouri  Railroad  on  St.  Louis  city 
and  county  bonds  by  129 

St.  Louis  county,  special  grant  of  aid  to 
Pacific  railroad  by  133 

St.  Louis  and  Iron  Mountain  Railroad, 
prospective  route  of,  described  67  ;  to 
be  a  branch  of  the  Pacific  Railroad  81  ; 
route  of,  located  88  ;  work  of,  construc- 
tion on  104  ;  default  of,  in  interest  pay- 
ments 113;  earnings  of  117;  released 
by  St.  Louis  from  further  payment 
of  interest  on  bonds  by  the  city  132; 
sale  of,  provided  for  143;  sold  145; 
sale  approved  by  the  governor  146; 
bid  of  Mr.  Thomas  Allen  for  149 ; 
purchasers  of,  sell  at  an  advance  150 ; 
earnings  on  154;  value  of,  based  on 
net  earnings  154 

Sale  of  railways,  preliminary  steps  for 
the  141  ;  reasons  for  and  against  the 
141  ;  first  act  providing  for  141  ;  pro- 
visions for  143  ;  conditions  of  143; 
bids  146;  bids  and  other  bids  148 

Santa  Fe  i 

Script,  issued  in  Georgia  for  the  purpose 
of  aiding  railways  200 

Second  lien,  genesis  of  the  idea  98 ;  on 
the  North  Missouri  Railroad,  taken  by 
the  state  137  ;  release  from,  asked  for 
by  the  North  Missouri  Railroad  Com- 
pany 164  ;  the  North  Missouri  released 
from  167 


Sinking  fund,  provision  made  fi;r  loi  ; 
provision  for,  suspended  107 

Slavery  interests  of  the  South  influenced 
by  Mr.  Asa  Whitney's  Pacific  Railway 
route  57 

South  Carolina,  internal-improvement  debt 
of  27  ;  internal  improvements  in  209  ; 
amendment  to  constitution  of,  prohibit- 
ing the  further  aiding  of  railways  by 
210 

South  Pacific  Railroad  Company  172 

South  West  Branch,  genesis  of  76 ;  land 
grant  to  80  ;  aided  by  the  state  80  ; 
route  of,  located  85  ;  finances  of  in  bad 
condition  85  ;  work  of  construction  on 
103;  default  in  interest  payments  by 
116;  earnings  of  117;  bad  manage- 
ment of  122  ;  violation  of  law  by  122  ; 
built  almost  wholly  by  state  bonds  122  ; 
costliest  piece  of  railway  in  Missouri  124; 
incompetency  or  fraud  in  connection 
with  124;  completion  of,  to  RoUa  133; 
sale  of,  provided  for  143;  false  valua- 
tion of  168;  operated  as  a  state  road 
170 ;  condition  of  170  ;  various  parties 
interested  in  171 ;  road  and  lands 
granted  in  fee  simple  to  a  corporation 
171  ;  conditions  of  grant  172 

State  credit  a  means  of  importing  capital 
8 

State  debt  of  Pennsylvania  13 

State  ownership,  railroads  to  revert  to  the 
state  70 

Tariff  duties,  on  rolled  bar  iron  (rails)  95 
Taxation,  necessary  in  Ohio,  to  cancel 
internal-improvement  debt  20  ;  exemp- 
tion of  railroads  from,  in  Missouri  71  ; 
increase  of  126;  rate  of,  reduced  195 
Taxes,  necessary  in  New  York  to  cancel 
internal-improvement  debt  10  ;  not 
judiciously  managed  in  Pennsylvania 
12;  reduction  of,  in  Pennsylvania  12; 
impossible  to  collect  in  Indiana  24 ; 
imposition  of,  in  Missouri,  to  save  credit 
of  the  state  109 


264 


INDEX 


Tennessee,  internal-improvement  debt  of 
27  ;  internal-improvement  experiments 
in  203 ;  bonds  of  railway  companies 
indorsed  by  204  ;  plan  of  aiding  rail- 
ways in,  not  satisfactory  203;  bonds 
issued  by,  for  aiding  railways  204 ;  aid 
granted  per  mile  by  204 ;  progress  of 
railways  in,  interrupted  by  the  war  205  ; 
corruption  in  205 ;  debt  of,  incurred  for 
railways  206 

Texas,  internal  improvements  in  219 

Three  per  cent,  fund  in  Missouri  distributed 
among  the  counties  38 

Tobacco  warehouse  33 

Trade,  Western,  from  Missouri  to  Mexico 
I 

Union  military  bonds  of  Missouri  125 
Union  Pacific  Railway,  bid  of,  for  Pacific 

Railroad  174 
United   States,  subscription   by,  to   canal 

stocks  15 


"  United  States  Dank"  in  Pennsylvania 
12 

Virginia,  Chesapeake  and  Ohio  Canal 
Company,  incorporated  by  15  ,  internal- 
improvement  debt  of  28  ;  internal 
improvements  in  206  ;  internal  improve- 
ments aided  by  stock  subscriptions  in 
207  ;  debt  of  208  ;  constitutional  amend- 
ment in  208 

Wabash  and  Erie  Canal  23 

Western  and  Atlantic  Railroad  in  Georgia 
igq,  201 

Weston  and  Atchison  Railroad  142 

Western  states,  general  characteristics  of 
internal  improvements  in  16 

Whitney,  Mr.  Asa,  pioneer  in  securing  a 
railway  from  the  interior  to  the  Pacific 
coast  55  ;  plan  of,  indorsed  by  South- 
ern states  55;  plan  of  approved  by- 
Congress  60 


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